1. Which of the following will happen when interest rates rise in A. The cost of borrowing will decrease B. The spending multiplier will decrease C. Investment spending will increase D. The price of previously issued bonds will increase E. The opportunity cost of holding money will increase 2. Which of the following is true for bonds but not for stocks? A. Bonds are the least liquid form of assets B. Bonds represent partial ownership in a company C. Bonds earn variable rates of return D. Bonds are interest-bearing assets E. Bonds have zero opportunity cost 3. Which of the following measures the opportunity cost of holding currency? A. The nominal wage rate B. The increase in the demand for money C. The forgone interest on alternative assets D. The ability to access currency to meet unexpected expenses E. The average income tax rates 4. Assume that a country's government increases borrowing. What will mostly likely previously issued bonds and the price level in the short run? A. Bond prices increase, price level increases B. Bond prices increase, price level decreases