When the interest rate on a bond is below the equilibrium interest rate, there is excess _________ in the bond market and the interest rate will _________
A: demand; rise
B: demand; fall
C: supply; fall
D: supply; rise
A: demand; rise
B: demand; fall
C: supply; fall
D: supply; rise
举一反三
- When the interest rate on a bond is above the equilibrium interest rate, in the bond market there is excess ________ and the interest rate will ________. A: demand; rise B: demand; fall C: supply; fall D: supply; rise
- The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 6 percent. The effect of this interest rate in the money market is that A: the money market is in equilibrium. B: people buy bonds and the interest rate falls. C: people sell bonds and the interest rate falls. D: bond prices fall and so the interest rate falls.
- If the inflation rate is zero, then A: both the nominal interest rate and the real interest rate can fall below zero. B: the nominal interest rate can fall below zero, but the real interest rate cannot fall below zero. C: the real interest rate can fall below zero, but the nominal interest rate cannot fall below zero. D: neither the nominal interest rate nor the real interest rate can fall below zero.
- When the expected inflation rate decreases, the demand for bonds _________, the supply of bonds _________, and the interest rate _________.
- Call provisions will be exercised when interest rates _________ and bond values _________. A: rise; rise B: fall; rise C: rise; fall D: fall; fall