1. If a lender is certain that market interest rates will fall in the near future, which of the following will they be most likely to purchase?

A. A six month treasury bill currently yielding 1.45%

B. A 5 year treasury note currently yielding 2.25%

C. A 20 year treasury bond currently yielding 3.65%

D. A 20 year AAA rated corporate bond currently yielding 3.65%

2.Which of these will cause the equilibrium interest rate to fall?

A. The savings rate decreases

B. Business borrowing decreases

C. The federal deficit increases

D. The economy enters a period of expansion

3. The supply of loanable funds curve would be shifted to the left by

A. A relative decrease in expected return on other assets

B. A decrease in the US government deficit

C. An increase in expected inflation

D. An increase in the liquidity of bonds relative to other assets

4. If the federal government were to increase the corporate profits tax rates other factors constant, we would expect to see,

A. The bond demand curve shift right

B. The bond supply curve shift left

C. The bond supply curve shift right

D. The bond demand curve shift left