Question 1.1. If the federal government decreases its spending and doesn't decrease taxes, the bond supply shifts to the (Points : 1)

left and the equilibrium interest rate rises. left and the equilibrium interest rate falls. right and the equilibrium interest rate rises. right and the equilibrium interest rate falls.

Question 2.2. If the expected gains on stocks rise, while the expected returns on bonds do not change, then (Points : 1)

the demand curve for bonds will shift to the right. the supply curve for loanable funds will shift to the right. the equilibrium interest rate will fall. the equilibrium interest rate will rise.

Question 3.3. If bond investors think they lack enough details to evaluate the likelihood of defaults on certain bonds, this will result in higher: (Points : 1)

expected return liquidity information costs expected inflation

Question 4.4. During a period of economic expansion, when expected profitability is high, (Points : 1)

the demand curve for bonds shifts to the left. the supply curve of bonds shifts to the right. the equilibrium interest rate falls. the equilibrium price of bonds rises.

Question 5.5. A decrease in expected inflation (Points : 1)

usually leads to falling nominal interest rates. results in increased nominal capital gains on physical assets. will shift the bond demand curve to the left. will shift the supply curve for loanable funds to the left.

Question 6.6. If the government increases taxes while holding expenditures constant, (Points : 1)

the bond supply curve will shift to the left and the equilibrium interest rate will fall. the bond supply curve will shift to the right and the real interest rate will fall. government borrowing will be increased. the government's deficit will increase.

Question 7.7. The formula for the yield to maturity, i, on a discount bond is (Points : 1)

i = (Face value - Discount price)/Discount price. i = (Discount price - Face value)/Discount price. i = (Face value - Discount price)/Face value. i = (Discount price - Face value)/Face value.

Question 8.8. If expected inflation declines by 2%, what should happen to nominal interest rates according to the Fisher effect? (Points : 1)

rise by 2% fall by 2% be cut in half double in size

Question 9.9. If there is an excess demand for bonds at a given price of bonds, then (Points : 1)

the interest rate will fall. the interest rate will rise. the price of bonds will fall. the interest rate may rise or the interest rate may fall depending upon the reasons for the excess demand for bonds.

Question 10.10. How is the interest rate that prevails in the bond market determined? (Points : 1)

by the interaction of stock prices and bond prices by the decision of the president, in consultation with Congress by the demand for and supply of bonds by the Board of Governors of the New York Stock Exchange