Term
| High interest rates might _____ purchasing a house or car but at the same time high interest rates might _____ saving |
|
Definition
|
|
Term
| _____ policy involves decisions about government spending and taxation |
|
Definition
|
|
Term
| Securities are _____ for the person who buys them, but are _____ for the individual or firm that issues them |
|
Definition
|
|
Term
| Which of the following benefit directly from any increase in the corporation's profitability? |
|
Definition
|
|
Term
| An example of the problem of _____ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families |
|
Definition
|
|
Term
| Dennis notices that jackets are on sale for $99. In this case money is functioning as a _____ |
|
Definition
|
|
Term
| If the price level doubles, the value of money |
|
Definition
|
|
Term
| Which of the following is included in both M1 and M2? |
|
Definition
|
|
Term
| The present value of an expected future payment _____ as the interest rate increases |
|
Definition
|
|
Term
| The present value of a fixed-payment loan is calculated as the _____ of the present value of all cash flow payments. |
|
Definition
|
|
Term
| The price of a coupon bond and the yield to maturity are _____ related; that is, as the yield to maturity _____, the price of the bond _____ |
|
Definition
|
|
Term
| Which of the following $5,000 face-value securities has the highest to maturity? |
|
Definition
| a 12% coupon bond selling for $4,500 |
|
|
Term
| If the interest rates on all bonds rise from 5 to 6% over the course of the year, which bond would you prefer to have been holding? |
|
Definition
| a bond with one year to maturity |
|
|
Term
| When the _____ interest rate is low, there are greater incentives to _____ and fewer incentives to _____ |
|
Definition
|
|
Term
| In which of the following situations would you prefer to be the lender? |
|
Definition
| The interest rate is 4% and the expected inflation rate is 1% |
|
|
Term
| Everything else held constant, a decrease in wealth |
|
Definition
| reduces the demand for silver |
|
|
Term
| Everything else held constant, if the expected return on ABC stock rises from 5 to 10% and the expected return on CBS stock is unchanged, then the expected return of holding CBS stock _____ relative to ABC stock and the demand for CBS stock _____ |
|
Definition
|
|
Term
| If gold becomes acceptable as a medium of exchange, the demand for gold will _____ and the demand for bonds will _____, everything else held constant |
|
Definition
|
|
Term
| Holding everything else constant, |
|
Definition
| the more liquid is asset A, relative to alternative assets, the greater will be the demand for asset A |
|
|
Term
| When the interest rate on a bond is above the equilibriu, interest rate, in the bond market there is excess _____ and the interest rate will _____ |
|
Definition
|
|
Term
| Everything else held constant, if interest rates are expected to fall in the future, the demand for long-term bonds today _____ and the demand curve shifts to the _____ |
|
Definition
|
|
Term
| When the expected inflation rate increases, the demand for bonds _____, the supply of bonds _____, and the interest rate _____, everything else held constant. |
|
Definition
| decreases; increases; rises |
|
|
Term
| When real income _____, the demand curve for money shifts to the _____ and the interest rate _____, everything else held constant |
|
Definition
|
|
Term
| _____ in the money supply creates excess _____ money, causing interest rates to _____, everything else held constant |
|
Definition
| Decrease; demand for; rise |
|
|
Term
| It is possible that when the money supply rises, interest rates may _____ if the _____ effect is more than offset by changes in income, the price level, and expected inflation |
|
Definition
|
|
Term
| A bond with default risk will always have a _____ risk premium and an increase in its default risk will _____ the risk premium |
|
Definition
|
|
Term
| Everything else held constand, if the federal government were to guarantee today that it will pay creditors if a corporation goes bankrupt in the future, the interest rate on corporate bonds will _____ and the interest rate on Treasury securities will _____ |
|
Definition
|
|
Term
| If 1-year interest rates for the next three years are expected to be 4, 2 and 3%, and the 3-year term premium is 1%, then the 3-year bond rate will be |
|
Definition
|
|
Term
| The mound-shaped yield curve in the figure above indicates that the inflation rate is expected to |
|
Definition
| rise moderately in the near-term and fall later on |
|
|
Term
| The mound-shaped yield curve in the figure above indicates that the short-term interest rates are expected to |
|
Definition
| rise in the near-term and fall later on |
|
|
