Question 7 2.5 pts Which of the following statements is the most accurate/complete explanation for the theoretical assertion that optimizing economic agents will use real instead of nominal interest rates in making their consumption/savings decisions? While nominal interest rates are measured in current dollars, real interest rates are measured in terms of market baskets of goods which yield utility upon consumption. As such, real interest rates are more informative about the potential impact of consumption/savings decisions on utility. Since optimizing economic agents are ultimately concerned about savings, they base their intertemporal resource allocation decisions on real interest rates. O While both nominal and real interest rates are measured in terms of current dollars, real interest rates are more informative about the potential impact of consumption/savings decisions on utility, Since optimizing economic agents are ultimately concerned about utility, they base their intertemporal resource allocation decisions on real interest rates. While nominal interest rates are measured in current dollars, real interest rates are measured in terms of market baskets of goods which yield utility upon consumption. As such, real interest rates are more informative about the potential impact of consumption/savings decisions on utility. Since optimizing economic agents are ultimately concerned about utility, they base their intertemporal resource allocation decisions on real interest rates. O While nominal interest rates are measured in current dollars, real interest rates are measured in terms of market baskets of goods which yield utility upon consumption. As such, real interest rates are more informative about the potential impact of consumption/savings decisions on utility. Since optimizing economic agents are ultimately concerned about current consumption, they base their intertemporal resource allocation decisions on real interest rates.D Question 8 2.5 pts Viewed from the vantage point of surplus spending units (SSUs), which of the following statements is the most accurate explanation for the relationship between bond prices and interest rates or yields to maturity? ing O A SSU who buys a bond (say a discount bond) is selling ownership rights to a given set of future payments. As such, the rate of interest or yield the SSU earns on this asset will decline as the price lie. the bond price) it pays to acquire property rights to the future payments increases. ( ASSU who buys a bond (say a discount bond) is buying ownership rights to a given set of future payments. As such, the rate of interest or yield the SSU earns on this asset will decline as the price fie. the bond price) it pays to acquire property rights to the future payments increases. O A SSU who buys a bond (say a discount bond] is buying ownership rights to a given set of future payments. As such, the rate of interest or yield the SSU earns on this asset will increase as the price li.e. the bond price) it pays to acquire property rights to the future payments increases. O ASSU who buys a bond (say a discount bond) is selling ownership rights to a given set of future payments. As such, the rate of interest or yield the SSU earns on this asset will increase as the price fie. the bond price) it pays to acquire property rights to the future payments increases. 2.5 pts D Question 91530 who buys a bond ferry a discount bond) Is selling ownership rights to given set of future payments, As such, the rate of Interest or yield the SSU earns on this asset will increase as the price fla the bond price) it pays to acquire property rights to the future payments increates D Question 9 2.5 pts ing An empirical finding that there is a full Fisher effect in stock returns but no Fisher effect in bond returns would imply that; holding all else constant. investors would be able to reduce the impact of inflation on their utility by shifting resources out of bonds and into stocks. True O Falsec Impact Ion on their utility by shifting resources out of bonds and Into stocks. O True False ing D Question 10 2.5 pts Any change in the economic environment that induces an increase in the demand for bonds (i.e. shifts the bond demand curve outwards so that bond demand is higher at each and every possible bond price) will also lead to an increase in the demand for loanable funds file: shift the demand curve for loanable funds outwards so that the demand for loanable funds is higher at each and every possible interest rate]. O True O False No new data to save. Last checked at 10:03am Submit Quiz