1.When does the opportunity cost of holding money rise?

A)When income falls

B)When bond prices rise

C)When interest rates rise

D)All of the answers are correct

2.In the short run, if the central bank decreases interest rates, then consumption and investment will ______, aggregate ______ will shift ______, and short-run equilibrium output will _______, and potential output is ________.

A)Decrease; demand; left; decrease; unchanged

B)Increase; demand; right; increase; unchanged

C)Decrease; supply; left; decrease; unchanged

D)Increase; demand; right; increase; increased

3.If the principal amount of a bond is $20,000, the coupon rate is 5%, the annual coupon payment made to the holders of the bond is:

A)$4,000

B)$1,000

C)$2,000

D)$3,000

4.How will an increase in the money supply transmit to the aggregate expenditure?

A)Increases interest rates and Y

B)Decreases interest rates and increases Y

C)Decreases interest rates and Y

D)Increases interest rates and decreases Y

5.If the coupon rate on newly issued bonds decreases, the price of previously issued outstanding similar bonds will ___.

A)Increase

B)Stay constant

C)Decrease

D)May either increase or decrease or stay constant