6. What factors make up the total demand for loanable funds? The total supply of loanable funds. Please list and define each of these demand and supply factors in the Loanable Funds Theory of Interest.

7. What is inflation? Why is it important?

8. Explain how inflation affects interest rates. What is the Fisher effect? What does it assume ?

9. Explain the meaning of the phrase term structure of interest rates. What is a yield curve? What assumptions are necessary to construct a yield curve?

10. Explain the difference between the expectations, market segmentation and liquidity premium views of the yield curve. What does each of these theories assume and what is the principal conclusion of each.