Chapter 5 Questions
34 Pages

Chapter 5 Questions

Course Number: ECON 2035, Spring 2013

College/University: LSU

Word Count: 7727

Rating:

Document Preview

The Economics of Money, Banking, and Financial Markets, 9e (Mishkin) Chapter 5 The Behavior of Interest Rates 5.1 Determinants of Asset Demand 1) Pieces of property that serve as a store of value are called A) assets. B) units of account. C) liabilities. D) borrowings. Answer: A Ques Status: New 2) Of the four factors that influence asset demand, which factor will cause the demand for all assets to increase when...

Unformatted Document Excerpt
Coursehero >> Louisiana >> LSU >> ECON 2035

Course Hero has millions of student submitted documents similar to the one
below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.

Course Hero has millions of student submitted documents similar to the one below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.

Economics The of Money, Banking, and Financial Markets, 9e (Mishkin) Chapter 5 The Behavior of Interest Rates 5.1 Determinants of Asset Demand 1) Pieces of property that serve as a store of value are called A) assets. B) units of account. C) liabilities. D) borrowings. Register to View AnswerQues Status: New 2) Of the four factors that influence asset demand, which factor will cause the demand for all assets to increase when it increases, everything else held constant? A) wealth B) expected returns C) risk D) liquidity Register to View AnswerQues Status: Previous Edition 3) If wealth increases, the demand for stocks ________ and that of long-term bonds ________, everything else held constant. A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases Register to View AnswerQues Status: Previous Edition 4) Everything else held constant, a decrease in wealth A) increases the demand for stocks. B) increases the demand for bonds. C) reduces the demand for silver. D) increases the demand for gold. Register to View AnswerQues Status: Revised 5) An increase in an asset's expected return relative to that of an alternative asset, holding everything else constant, ________ the quantity demanded of the asset. A) increases B) decreases C) has no effect on D) erases Register to View AnswerQues Status: New 1 6) Everything else held constant, if the expected return on ABC stock rises from 5 to 10 percent and the expected return on CBS stock is unchanged, then the expected return of holding CBS stock ________ relative to ABC stock and the demand for CBS stock ________. A) rises; rises B) rises; falls C) falls; rises D) falls; falls Register to View AnswerQues Status: Previous Edition 7) Everything else held constant, if the expected return on U.S. Treasury bonds falls from 10 to 5 percent and the expected return on GE stock rises from 7 to 8 percent, then the expected return of holding GE stock ________ relative to U.S. Treasury bonds and the demand for GE stock ________. A) rises; rises B) rises; falls C) falls; rises D) falls; falls Register to View AnswerQues Status: Previous Edition 8) If housing prices are expected to increase, then, other things equal, the demand for houses will ________ and that of Treasury bills will ________. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase Register to View AnswerQues Status: Revised 9) If stock prices are expected to drop dramatically, then, other things equal, the demand for stocks will ________ and that of Treasury bills will ________. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase Register to View AnswerQues Status: Previous Edition 2 10) Everything else held constant, if the expected return on RST stock declines from 12 to 9 percent and the expected return on XYZ stock declines from 8 to 7 percent, then the expected return of holding RST stock ________ relative to XYZ stock and demand for XYZ stock ________. A) rises; rises B) rises; falls C) falls; rises D) falls; falls Register to View AnswerQues Status: Previous Edition 11) Everything else held constant, if the expected return on U.S. Treasury bonds falls from 8 to 7 percent and the expected return on corporate bonds falls from 10 to 8 percent, then the expected return of corporate bonds ________ relative to U.S. Treasury bonds and the demand for corporate bonds ________. A) rises; rises B) rises; falls C) falls; rises D) falls; falls Register to View AnswerQues Status: Previous Edition 12) An increase in the expected rate of inflation will ________ the expected return on bonds relative to the that on ________ assets, everything else held constant. A) reduce; financial B) reduce; real C) raise; financial D) raise; real Register to View AnswerQues Status: Previous Edition 13) If fluctuations in interest rates become smaller, then, other things equal, the demand for stocks ________ and the demand for long-term bonds ________. A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases Register to View AnswerQues Status: Previous Edition 14) If the price of gold becomes less volatile, then, other things equal, the demand for stocks will ________ and the demand for antiques will ________. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase Register to View AnswerQues Status: Previous Edition 3 15) If brokerage commissions on bond sales decrease, then, other things equal, the demand for bonds will ________ and the demand for real estate will ________. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase Register to View AnswerQues Status: Previous Edition 16) If gold becomes acceptable as a medium of exchange, the demand for gold will ________ and the demand for bonds will ________, everything else held constant. A) decrease; decrease B) decrease; increase C) increase; increase D) increase; decrease Register to View AnswerQues Status: Previous Edition 17) The demand for Picasso paintings rises (holding everything else equal) when A) stocks become easier to sell. B) people expect a boom in real estate prices. C) Treasury securities become riskier. D) people expect gold prices to rise. Register to View AnswerQues Status: Revised 18) The demand for silver decreases, other things equal, when A) the gold market is expected to boom. B) the market for silver becomes more liquid. C) wealth grows rapidly. D) interest rates are expected to rise. Register to View AnswerQues Status: Revised 19) You would be less willing to purchase U.S. Treasury bonds, other things equal, if A) you inherit $1 million from your Uncle Harry. B) you expect interest rates to fall. C) gold becomes more liquid. D) stock prices are expected to fall. Register to View AnswerQues Status: Revised 4 20) You would be more willing to buy AT&T bonds (holding everything else constant) if A) the brokerage commissions on bond sales become cheaper. B) interest rates are expected to rise. C) your wealth has decreased. D) you expect diamonds to appreciate in value. Register to View AnswerQues Status: Revised 21) The demand for gold increases, other things equal, when A) the market for silver becomes more liquid. B) interest rates are expected to rise. C) interest rates are expected to fall. D) real estate prices are expected to increase. Register to View AnswerQues Status: Revised 22) Holding everything else constant, A) if asset A's risk rises relative to that of alternative assets, the demand will increase for asset A. B) the more liquid is asset A, relative to alternative assets, the greater will be the demand for asset A. C) the lower the expected return to asset A relative to alternative assets, the greater will be the demand for asset A. D) if wealth increases, demand for asset A increases and demand for alternative assets decreases. Register to View AnswerQues Status: Previous Edition 23) Holding all other factors constant, the quantity demanded of an asset is A) positively related to wealth. B) negatively related to its expected return relative to alternative assets. C) positively related to the risk of its returns relative to alternative assets. D) negatively related to its liquidity relative to alternative assets. Register to View AnswerQues Status: New 24) Everything else held constant, would an increase in volatility of stock prices have any impact on the demand for rare coins? Why or why not? Answer: Yes, it would cause the demand for rare coins to increase. The increased volatility of stock prices means that there is relatively more risk in owning stock than there was previously and so the demand for an alternative asset, rare coins, would increase. Ques Status: Previous Edition 5 5.2 Supply and Demand in the Bond Market 1) In the bond market, the bond demanders are the ________ and the bond suppliers are the ________. A) lenders; borrowers B) lenders; advancers C) borrowers; lenders D) borrowers; advancers Register to View AnswerQues Status: New 2) The demand curve for bonds has the usual downward slope, indicating that at ________ prices of the bond, everything else equal, the ________ is higher. A) higher; demand B) higher; quantity demanded C) lower; demand D) lower; quantity demanded Register to View AnswerQues Status: Previous Edition 3) The supply curve for bonds has the usual upward slope, indicating that as the price ________, ceteris paribus, the ________ increases. A) falls; supply B) falls; quantity supplied C) rises; supply D) rises; quantity supplied Register to View AnswerQues Status: Previous Edition 4) In the bond market, the market equilibrium shows the market-clearing ________ and marketclearing ________. A) price; deposit B) interest rate; deposit C) price; interest rate D) interest rate; premium Register to View AnswerQues Status: Previous Edition 5) When the price of a bond is above the equilibrium price, there is an excess ________ bonds and price will ________. A) demand for; rise B) demand for; fall C) supply of; fall D) supply of; rise Register to View AnswerQues Status: Previous Edition 6 6) When the price of a bond is ________ the equilibrium price, there is an excess demand for bonds and price will ________. A) above; rise B) above; fall C) below; fall D) below; rise Register to View AnswerQues Status: Previous Edition 7) 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 Register to View AnswerQues Status: Previous Edition 8) When the interest rate on a bond is ________ the equilibrium interest rate, in the bond market there is excess ________ and the interest rate will ________. A) above; demand; rise B) above; demand; fall C) below; supply; fall D) above; supply; rise Register to View AnswerQues Status: Previous Edition 9) A situation in which the quantity of bonds supplied exceeds the quantity of bonds demanded is called a condition of excess supply; because people want to sell ________ bonds than others want to buy, the price of bonds will ________. A) fewer; fall B) fewer; rise C) more; fall D) more; rise Register to View AnswerQues Status: Previous Edition 10) If the price of bonds is set ________ the equilibrium price, the quantity of bonds demanded exceeds the quantity of bonds supplied, a condition called excess ________. A) above; demand B) above; supply C) below; demand D) below; supply Register to View AnswerQues Status: Previous Edition 7 5.3 Changes in Equilibrium Interest Rates 1) A movement along the bond demand or supply curve occurs when ________ changes. A) bond price B) income C) wealth D) expected return Register to View AnswerQues Status: Previous Edition 2) When the price of a bond decreases, all else equal, the bond demand curve ________. A) shifts right B) shifts left C) does not shift D) inverts Register to View AnswerQues Status: Previous Edition 3) During business cycle expansions when income and wealth are rising, the demand for bonds ________ and the demand curve shifts to the ________, everything else held constant. A) falls; right B) falls; left C) rises; right D) rises; left Register to View AnswerQues Status: Previous Edition 4) Everything else held constant, when households save less, wealth and the demand for bonds ________ and the bond demand curve shifts ________. A) increase; right B) increase; left C) decrease; right D) decrease; left Register to View AnswerQues Status: Previous Edition 5) Everything else held constant, if interest rates are expected to fall in the future, the demand for long-term bonds today ________ and the demand curve shifts to the ________. A) rises; right B) rises; left C) falls; right D) falls; left Register to View AnswerQues Status: Previous Edition 8 6) Holding the expected return on bonds constant, an increase in the expected return on common stocks would ________ the demand for bonds, shifting the demand curve to the ________. A) decrease; left B) decrease; right C) increase; left D) increase; right Register to View AnswerQues Status: Previous Edition 7) Everything else held constant, an increase in expected inflation, lowers the expected return on ________ compared to ________ assets. A) bonds; financial B) bonds; real C) physical; financial D) physical; real Register to View AnswerQues Status: Previous Edition 8) Everything else held constant, an increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to ________ and the demand curve to shift to the ________. A) rise; right B) rise; left C) fall; right D) fall; left Register to View AnswerQues Status: Previous Edition 9) Everything else held constant, when stock prices become less volatile, the demand curve for bonds shifts to the ________ and the interest rate ________. A) right; rises B) right; falls C) left; falls D) left; rises Register to View AnswerQues Status: Previous Edition 10) Everything else held constant, when stock prices become ________ volatile, the demand curve for bonds shifts to the ________ and the interest rate ________. A) more; right; rises B) more; right; falls C) less; left; falls D) less; left; does not change Register to View AnswerQues Status: Previous Edition 9 11) Everything else held constant, an increase in the liquidity of bonds results in a ________ in demand for bonds and the demand curve shifts to the ________. A) rise; right B) rise; left C) fall; right D) fall; left Register to View AnswerQues Status: Previous Edition 12) Everything else held constant, when bonds become less widely traded, and as a consequence the market becomes less liquid, the demand curve for bonds shifts to the ________ and the interest rate ________. A) right; rises B) right; falls C) left; falls D) left; rises Register to View AnswerQues Status: Previous Edition 13) The reduction of brokerage commissions for trading common stocks that occurred in 1975 caused the demand for bonds to ________ and the demand curve to shift to the ________. A) fall; right B) fall, left C) rise; right D) rise; left Register to View AnswerQues Status: Previous Edition 14) Factors that decrease the demand for bonds include A) an increase in the volatility of stock prices. B) a decrease in the expected returns on stocks. C) a decrease in the inflation rate. D) a decrease in the riskiness of stocks. Register to View AnswerQues Status: Previous Edition 15) During a recession, the supply of bonds ________ and the supply curve shifts to the ________, everything else held constant. A) increases; left B) increases; right C) decreases; left D) decreases; right Register to View AnswerQues Status: Previous Edition 10 16) In a business cycle expansion, the ________ of bonds increases and the ________ curve shifts to the ________ as business investments are expected to be more profitable. A) supply; supply; right B) supply; supply; left C) demand; demand; right D) demand; demand; left Register to View AnswerQues Status: New 17) When the expected inflation rate increases, the real cost of borrowing ________ and bond supply ________, everything else held constant. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases Register to View AnswerQues Status: Previous Edition 18) An increase in the expected inflation rate causes the supply of bonds to ________ and the supply curve to shift to the ________, everything else held constant. A) increase; left B) increase; right C) decrease; left D) decrease; right Register to View AnswerQues Status: Previous Edition 19) Higher government deficits ________ the supply of bonds and shift the supply curve to the ________, everything else held constant. A) increase; left B) increase; right C) decrease; left D) decrease; right Register to View AnswerQues Status: Previous Edition 20) Factors that can cause the supply curve for bonds to shift to the right include A) an expansion in overall economic activity. B) a decrease in expected inflation. C) a decrease in government deficits. D) a business cycle recession. Register to View AnswerQues Status: Previous Edition 11 21) When the inflation rate is expected to increase, the ________ for bonds falls, while the ________ curve shifts to the right, everything else held constant. A) demand; demand B) demand; supply C) supply; demand D) supply; supply Register to View AnswerQues Status: Previous Edition 22) When the expected inflation rate increases, the demand for bonds ________, the supply of bonds ________, and the interest rate ________, everything else held constant. A) increases; increases; rises B) decreases; decreases; falls C) increases; decreases; falls D) decreases; increases; rises Register to View AnswerQues Status: Previous Edition 23) Everything else held constant, when the inflation rate is expected to rise, interest rates will ________; this result has been termed the ________. A) fall; Keynes effect B) fall; Fisher effect C) rise; Keynes effect D) rise; Fisher effect Register to View AnswerQues Status: Previous Edition 24) The economist Irving Fisher, after whom the Fisher effect is named, explained why interest rates ________ as the expected rate of inflation ________, everything else held constant. A) rise; increases B) rise; stabilizes C) fall; stabilizes D) fall; increases Register to View AnswerQues Status: Previous Edition 25) Everything else held constant, during a business cycle expansion, the supply of bonds shifts to the ________ as businesses perceive more profitable investment opportunities, while the demand for bonds shifts to the ________ as a result of the increase in wealth generated by the economic expansion. A) right; left B) right; right C) left; left D) left; right Register to View AnswerQues Status: Previous Edition 12 26) When the economy slips into a recession, normally the demand for bonds ________, the supply of bonds ________, and the interest rate ________, everything else held constant. A) increases; increases; rises B) decreases; decreases; falls C) increases; decreases; falls D) decreases; increases; rises Register to View AnswerQues Status: Previous Edition 27) When an economy grows out of a recession, normally the demand for bonds ________ and the supply of bonds ________, everything else held constant. A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases Register to View AnswerQues Status: Previous Edition 28) Deflation causes the demand for bonds to ________, the supply of bonds to ________, and bond prices to ________, everything else held constant. A) increase; increase; increase B) increase; decrease; increase C) decrease; increase; increase D) decrease; decrease; increase Register to View AnswerQues Status: Previous Edition 29) In the 1990s Japan had the lowest interest rates in the world due to a combination of A) inflation and recession. B) deflation and expansion. C) inflation and expansion. D) deflation and recession. Register to View AnswerQues Status: Previous Edition 30) When the interest rate changes, A) the demand curve for bonds shifts to the right. B) the demand curve for bonds shifts to the left. C) the supply curve for bonds shifts to the right. D) it is because either the demand or the supply curve has shifted. Register to View AnswerQues Status: Previous Edition 13 31) The interest rate falls when either the demand for bonds ________ or the supply of bonds ________. A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases Register to View AnswerQues Status: Revised 32) When the government has a surplus, as occurred in the late 1990s, the ________ curve of bonds shifts to the ________, everything else held constant. A) supply; right B) supply; left C) demand; right D) demand; left Register to View AnswerQues Status: Previous Edition 33) A decrease in the brokerage commissions in the housing market from 6% to 5% of the sales price will shift the ________ curve for bonds to the ________, everything else held constant. A) demand; right B) demand; left C) supply; right D) supply; left Register to View AnswerQues Status: Previous Edition 34) When rare coin prices become volatile, the ________ curve for bonds shifts to the ________, everything else held constant. A) demand; right B) demand; left C) supply; right D) supply; left Register to View AnswerQues Status: Previous Edition 35) If people expect real estate prices to increase significantly, the ________ curve for bonds will shift to the ________, everything else held constant. A) demand; right B) demand; left C) supply; left D) supply; right Register to View AnswerQues Status: Previous Edition 14 36) Everything else held constant, when prices in the art market become more uncertain, A) the demand curve for bonds shifts to the left and the interest rate rises. B) the demand curve for bonds shifts to the left and the interest rate falls. C) the demand curve for bonds shifts to the right and the interest rate falls. D) the supply curve for bonds shifts to the right and the interest rate falls. Register to View AnswerQues Status: Previous Edition 37) Everything else held constant, when real estate prices are expected to decrease A) the demand curve for bonds shifts to the left and the interest rate rises. B) the demand curve for bonds shifts to the left and the interest rate falls. C) the demand curve for bonds shifts to the right and the interest rate falls. D) the supply curve for bonds shifts to the right and the interest rate falls. Register to View AnswerQues Status: New 38) Everything else held constant, when the government has higher budget deficits A) the demand curve for bonds shifts to the left and the interest rate rises. B) the demand curve for bonds shifts to the left and the interest rate falls. C) the supply curve for bonds shifts to the right and the interest rate falls. D) the supply curve for bonds shifts to the right and the interest rate rises. Register to View AnswerQues Status: New 39) If stock prices are expected to climb next year, everything else held constant, the ________ curve for bonds shifts ________ and the interest rate ________. A) demand; left; rises B) demand; right; rises C) demand; left; falls D) supply; left; rises Register to View AnswerQues Status: New 40) If prices in the bond market become more volatile, everything else held constant, the demand curve for bonds shifts ________ and interest rates ________. A) left; rise B) left; fall C) right; rise D) right; fall Register to View AnswerQues Status: New 15 41) If brokerage commissions on stocks fall, everything else held constant, the demand for bonds ________, the price of bonds ________, and the interest rate ________. A) decreases; decreases; increases B) decreases; decreases; decreases C) increases; decreases; increases D) increases; increases; increases Register to View AnswerQues Status: New 42) If the expected return on bonds increases, all else equal, the demand for bonds increases, the price of bonds ________, and the interest rate ________. A) increases; decreases B) increases; increases C) decreases; decreases D) decreases; increases Register to View AnswerQues Status: New 43) In the figure above, a factor that could cause the supply of bonds to shift to the right is: A) a decrease in government budget deficits. B) a decrease in expected inflation. C) a recession. D) a business cycle expansion. Register to View AnswerQues Status: Previous Edition 44) In the figure above, a factor that could cause the demand for bonds to decrease (shift to the left) is: A) an increase in the expected return on bonds relative to other assets. B) a decrease in the expected return on bonds relative to other assets. C) an increase in wealth. D) a reduction in the riskiness of bonds relative to other assets. Register to View AnswerQues Status: Previous Edition 16 45) In the figure above, the price of bonds would fall from P1 to P2 A) inflation is expected to increase in the future. B) interest rates are expected to fall in the future. C) the expected return on bonds relative to other assets is expected to increase in the future. D) the riskiness of bonds falls relative to assets. Answer: other A Ques Status: Previous Edition 46) In the figure above, a factor that could cause the supply of bonds to increase (shift to the right) is: A) a decrease in government budget deficits. B) a decrease in expected inflation. C) expectations of more profitable investment opportunities. D) a business cycle recession. Register to View AnswerQues Status: Previous Edition 47) In the figure above, a factor that could cause the demand for bonds to shift to the right is: A) an increase in the riskiness of bonds relative to other assets. B) an increase in the expected rate of inflation. C) expectations of lower interest rates in the future. D) a decrease in wealth. Register to View AnswerQues Status: Revised 48) In the figure above, the price of bonds would fall from P2 to P1 if A) there is a business cycle recession. B) there is a business cycle expansion. C) inflation is expected to increase in the future. D) inflation is expected to decrease in the future. Register to View AnswerQues Status: Previous Edition 17 49) What is the impact on interest rates when the Federal Reserve decreases the money supply by selling bonds to the public? Answer: Bond supply increases and the bond supply curve shifts to the right. The new equilibrium bond price is lower and thus interest rates will increase. Ques Status: Previous Edition 50) Use demand and supply analysis to explain why an expectation of Fed rate hikes would cause Treasury prices to fall. Answer: The expected return on bonds would decrease relative to other assets resulting in a decrease in the demand for bonds. The leftward shift of the bond demand curve results in a new lower equilibrium price for bonds. Ques Status: Previous Edition 5.4 Supply and Demand in the Market for Money: The Liquidity Preference Framework 1) In Keynes's liquidity preference framework, individuals are assumed to hold their wealth in two forms: A) real assets and financial assets. B) stocks and bonds. C) money and bonds. D) money and gold. Register to View AnswerQues Status: Previous Edition 2) In Keynes's liquidity preference framework, A) the demand for bonds must equal the supply of money. B) the demand for money must equal the supply of bonds. C) an excess demand of bonds implies an excess demand for money. D) an excess supply of bonds implies an excess demand for money. Register to View AnswerQues Status: Previous Edition 3) In Keynes's liquidity preference framework, if there is excess demand for money, there is A) excess demand for bonds. B) equilibrium in the bond market. C) excess supply of bonds. D) too much money. Register to View AnswerQues Status: Revised 18 4) The bond supply and demand framework is easier to use when analyzing the effects of changes in ________, while the liquidity preference framework provides a simpler analysis of the effects from changes in income, the price level, and the supply of ________. A) expected inflation; bonds B) expected inflation; money C) government budget deficits; bonds D) government budget deficits; money Register to View AnswerQues Status: Previous Edition 5) Keynes assumed that money has ________ rate of return. A) a positive B) a negative C) a zero D) an increasing Register to View AnswerQues Status: Previous Edition 6) In his Liquidity Preference Framework, Keynes assumed that money has a zero rate of return; thus, A) when interest rates rise, the expected return on money falls relative to the expected return on bonds, causing the demand for money to fall. B) when interest rates rise, the expected return on money falls relative to the expected return on bonds, causing the demand for money to rise. C) when interest rates fall, the expected return on money falls relative to the expected return on bonds, causing the demand for money to fall. D) when interest rates fall, the expected return on money falls relative to the expected return on bonds, causing the demand for money to rise. Register to View AnswerQues Status: Previous Edition 7) In Keynes's liquidity preference framework, as the expected return on bonds increases (holding everything else unchanged), the expected return on money ________, causing the demand for ________ to fall. A) falls; bonds B) falls; money C) rises; bonds D) rises; money Register to View AnswerQues Status: Previous Edition 8) The opportunity cost of holding money is A) the level of income. B) the price level. C) the interest rate. D) the discount rate. Register to View AnswerQues Status: Previous Edition 19 9) An increase in the interest rate A) increases the demand for money. B) increases the quantity of money demanded. C) decreases the demand for money. D) decreases the quantity of money demanded. Register to View AnswerQues Status: Previous Edition 10) If there is an excess supply of money A) individuals sell bonds, causing the interest rate to rise. B) individuals sell bonds, causing the interest rate to fall. C) individuals buy bonds, causing interest rates to fall. D) individuals buy bonds, causing interest rates to rise. Register to View AnswerQues Status: Previous Edition 11) When the interest rate is above the equilibrium interest rate, there is an excess ________ money and the interest rate will ________. A) demand for; rise B) demand for; fall C) supply of; fall D) supply of; rise Register to View AnswerQues Status: Previous Edition 12) In the market for money, an interest rate below equilibrium results in an excess ________ money and the interest rate will ________. A) demand for; rise B) demand for; fall C) supply of; fall D) supply of; rise Register to View AnswerQues Status: Previous Edition 20 5.5 Changes in Equilibrium Interest Rates in the Liquidity Preference Framework 1) In the Keynesian liquidity preference framework, an increase in the interest rate causes the demand curve for money to ________, everything else held constant. A) shift right B) shift left C) stay where it is D) invert Register to View AnswerQues Status: Previous Edition 2) A lower level of income causes the demand for money to ________ and the interest rate to ________, everything else held constant. A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase Register to View AnswerQues Status: Previous Edition 3) When real income ________, the demand curve for money shifts to the ________ and the interest rate ________, everything else held constant. A) falls; right; rises B) rises; right; rises C) falls; left; rises D) rises; left; rises Register to View AnswerQues Status: Previous Edition 4) A business cycle expansion increases income, causing money demand to ________ and interest rates to ________, everything else held constant. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase Register to View AnswerQues Status: Previous Edition 5) In the Keynesian liquidity preference framework, a rise in the price level causes the demand for money to ________ and the demand curve to shift to the ________, everything else held constant. A) increase; left B) increase; right C) decrease; left D) decrease; right Register to View AnswerQues Status: Previous Edition 21 6) When the price level ________, the demand curve for money shifts to the ________ and the interest rate ________, everything else held constant. A) falls; left; falls B) rises; right; falls C) falls; left; rises D) rises; right; rises Register to View AnswerQues Status: Previous Edition 7) A rise in the price level causes the demand for money to ________ and the interest rate to ________, everything else held constant. A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase Register to View AnswerQues Status: Previous Edition 8) When the price level falls, the ________ curve for nominal money ________, and interest rates ________, everything else held constant. A) demand; decreases; fall B) demand; increases; rise C) supply; increases; rise D) supply; decreases; fall Register to View AnswerQues Status: Previous Edition 9) A decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________, everything else held constant. A) decrease; right B) decrease; left C) increase; right D) increase; left Register to View AnswerQues Status: Previous Edition 10) When the Fed decreases the money stock, the money supply curve shifts to the ________ and the interest rate ________, everything else held constant. A) right; rises B) right; falls C) left; falls D) left; rises Register to View AnswerQues Status: Previous Edition 22 11) When the Fed ________ the money stock, the money supply curve shifts to the ________ and the interest rate ________, everything else held constant. A) decreases; right; rises B) increases; right; falls C) decreases; left; falls D) increases; left; rises Register to View AnswerQues Status: Previous Edition 12) ________ in the money supply creates excess ________ money, causing interest rates to ________, everything else held constant. A) A decrease; demand for; rise B) An increase; demand for; fall C) An increase; supply of; rise D) A decrease; supply of; fall Register to View AnswerQues Status: Previous Edition 13) ________ in the money supply creates excess demand for ________, causing interest rates to ________, everything else held constant. A) An increase; money; rise B) An increase; bonds; fall C) A decrease; bonds; rise D) A decrease; money; fall Register to View AnswerQues Status: Previous Edition 14) When the price level falls, the ________ curve for nominal money ________, and interest rates ________, everything else held constant. A) demand; decreases; fall B) demand; increases; rise C) supply; increases; rise D) supply; decreases; fall Register to View AnswerQues Status: Previous Edition 23 15) In the figure above, one factor not responsible for the decline in the demand for money is A) a decline the price level. B) a decline in income. C) an increase in income. D) a decline in the expected inflation rate. Register to View AnswerQues Status: Previous Edition 16) In the figure above, the decrease in the interest rate from i1 to i2 can be explained by A) a decrease in money growth. B) a decline in the expected price level. C) an increase in income. D) an increase in the expected price level. Register to View AnswerQues Status: Previous Edition 24 17) In the figure above, the factor responsible for the decline in the interest rate is A) a decline the price level. B) a decline in income. C) an increase in the money supply. D) a decline in the expected inflation rate. Register to View AnswerQues Status: Previous Edition 18) In the figure above, the decrease in the interest rate from i1 to i2 can be explained by A) a decrease in money growth. B) an increase in money growth. C) a decline in the expected price level. D) an increase in income. Register to View AnswerQues Status: Previous Edition 19) Milton Friedman called the response of lower interest rates resulting from an increase in the money supply the ________ effect. A) liquidity B) price level C) expected-inflation D) income Register to View AnswerQues Status: New 20) Of the four effects on interest rates from an increase in the money supply, the initial effect is, generally, the A) income effect. B) liquidity effect. C) price level effect. D) expected inflation effect. Register to View AnswerQues Status: Previous Edition 25 21) In the liquidity preference framework, a one-time increase in the money supply results in a price level effect. The maximum impact of the price level effect on interest rates occurs A) at the moment the price level hits its peak (stops rising) because both the price level and expected inflation effects are at work. B) immediately after the price level begins to rise, because both the price level and expected inflation effects are at work. C) at the moment the expected inflation rate hits its peak. D) at the moment the inflation rate hits it peak. Register to View AnswerQues Status: Previous Edition 22) Of the four effects on interest rates from an increase in the money supply, the one that works in the opposite direction of the other three is the A) liquidity effect. B) income effect. C) price level effect. D) expected inflation effect. Register to View AnswerQues Status: Previous Edition 23) It is possible that when the money supply rises, interest rates may ________ if the ________ effect is more than offset by changes in income, the price level, and expected inflation. A) fall; liquidity B) fall; risk C) rise; liquidity D) rise; risk Register to View AnswerQues Status: Revised 24) When the growth rate of the money supply increases, interest rates end up being permanently lower if A) the liquidity effect is larger than the other effects. B) there is fast adjustment of expected inflation. C) there is slow adjustment of expected inflation. D) the expected inflation effect is larger than the liquidity effect. Register to View AnswerQues Status: Previous Edition 25) When the growth rate of the money supply is increased, interest rates will fall immediately if the liquidity effect is ________ than the other money supply effects and there is ________ adjustment of expected inflation. A) larger; fast B) larger; slow C) smaller; slow D) smaller; fast Register to View AnswerQues Status: Previous Edition 26 26) If the Fed wants to permanently lower interest rates, then it should raise the rate of money growth if A) there is fast adjustment of expected inflation. B) there is slow adjustment of expected inflation. C) the liquidity effect is smaller than the expected inflation effect. D) the liquidity effect is larger than the other effects. Register to View AnswerQues Status: Previous Edition 27) If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is slow, then the A) interest rate will fall. B) interest rate will rise. C) interest rate will initially fall but eventually climb above the initial level in response to an increase in money growth. D) interest rate will initially rise but eventually fall below the initial level in response to an increase in money growth. Register to View AnswerQues Status: Previous Edition 28) If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is immediate, then the A) interest rate will fall. B) interest rate will rise. C) interest rate will fall immediately below the initial level when the money supply grows. D) interest rate will rise immediately above the initial level when the money supply grows. Register to View AnswerQues Status: Previous Edition 27 29) In the figure above, illustrates the effect of an increased rate of money supply growth at time period 0. From the figure, one can conclude that the A) liquidity effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. B) liquidity effect is larger than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. C) liquidity effect is larger than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. D) liquidity effect is smaller than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. Register to View AnswerQues Status: Previous Edition 30) In the figure above, illustrates the effect of an increased rate of money supply growth at time period 0. From the figure, one can conclude that the A) Fisher effect is dominated by the liquidity effect and interest rates adjust slowly to changes in expected inflation. B) liquidity effect is dominated by the Fisher effect and interest rates adjust slowly to changes in expected inflation. C) liquidity effect is dominated by the Fisher effect and interest rates adjust quickly to changes in expected inflation. D) Fisher effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. Register to View AnswerQues Status: Previous Edition 28 31) The figure above illustrates the effect of an increased rate of money supply growth at time period T0. From the figure, one can conclude that the A) liquidity effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. B) liquidity effect is larger than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. C) liquidity effect is larger than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. D) liquidity effect is smaller than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. Register to View AnswerQues Status: Previous Edition 32) The figure above illustrates the effect of an increased rate of money supply growth at time period T0. From the figure, one can conclude that the A) Fisher effect is dominated by the liquidity effect and interest rates adjust slowly to changes in expected inflation. B) liquidity effect is dominated by the Fisher effect and interest rates adjust slowly to changes in expected inflation. C) liquidity effect is dominated by the Fisher effect and interest rates adjust quickly to changes in expected inflation. D) Fisher effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. Register to View AnswerQues Status: Previous Edition 29 33) The figure above illustrates the effect of an increased rate of money supply growth at time period T0. From the figure, one can conclude that the A) liquidity effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. B) liquidity effect is larger than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. C) liquidity effect is larger than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. D) liquidity effect is smaller than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. Register to View AnswerQues Status: Previous Edition 34) The figure above illustrates the effect of an increased rate of money supply growth at time period T0. From the figure, one can conclude that the A) Fisher effect is dominated by the liquidity effect and interest rates adjust slowly to changes in expected inflation. B) liquidity effect is dominated by the Fisher effect and interest rates adjust slowly to changes in expected inflation. C) liquidity effect is dominated by the Fisher effect and interest rates adjust quickly to changes in expected inflation. D) Fisher effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. Register to View AnswerQues Status: Previous Edition 35) Interest rates increased continuously during the 1970s. The most likely explanation is A) banking failures that reduced the money supply. B) a rise in the level of income. C) the repeated bouts of recession and expansion. D) increasing expected rates of inflation. Register to View AnswerQues Status: Previous Edition 30 36) Using the liquidity preference framework, what will happen to interest rates if the Fed increases the money supply? Answer: The Fed's actions shift the money supply curve to the right. The new equilibrium interest rate will be lower than it was previously. Ques Status: Previous Edition 37) Using the liquidity preference framework, show what happens to interest rates during a business cycle recession. Answer: During a business cycle recession, income will fall. This causes the money demand curve to shift to the left. The resulting equilibrium will be at a lower interest rate. Ques Status: Revised 5.6 Web Appendix 1: Models of Asset Pricing 1) The riskiness of an asset is measured by A) the magnitude of its return. B) the absolute value of any change in the asset's price. C) the standard deviation of its return. D) risk is impossible to measure. Register to View AnswerQues Status: Previous Edition 2) Holding many risky assets and thus reducing the overall risk an investor faces is called A) diversification. B) foolishness. C) risk acceptance. D) capitalization. Register to View AnswerQues Status: New 3) The ________ the returns on two securities move together, the ________ benefit there is from diversification. A) less; more B) less; less C) more; more D) more; greater Register to View AnswerQues Status: New 4) A higher ________ means that an asset's return is more sensitive to changes in the value of the market portfolio. A) alpha B) beta C) CAPM D) APT Register to View AnswerQues Status: Previous Edition 31 5) The riskiness of an asset that is unique to the particular asset is A) systematic risk. B) portfolio risk. C) investment risk. D) nonsystematic risk. Register to View AnswerQues Status: Previous Edition 6) The risk of a well-diversified portfolio depends only on the ________ risk of the assets in the portfolio. A) systematic B) nonsystematic C) portfolio D) investment Register to View AnswerQues Status: Previous Edition 7) Both the CAPM and APT suggest that an asset should be priced so that it has a higher expected return A) when it has a greater systematic risk. B) when it has a greater risk in isolation. C) when it has a lower systematic risk. D) when it has a lower systematic risk and a lower risk in isolation. Register to View AnswerQues Status: New 8) In contrast to the CAPM , the APT assumes that there can be several sources of ________ that cannot be eliminated through diversification. A) nonsystematic risk B) systematic risk C) credit risk D) arbitrary risk Register to View AnswerQues Status: Previous Edition 32 5.7 Web Appendix 2: Applying the Asset Market Approach to a Commodity Market: The Case of Gold 1) When stock prices become more volatile, the ________ curve for gold shifts right and gold prices ________, everything else held constant. A) demand; increase B) demand; decrease C) supply; increase D) supply; decrease Register to View AnswerQues Status: New 2) A return to the gold standard, that is, using gold for money will ________ the ________ for gold, ________ its price, everything else held constant. A) increase; demand; increasing B) decrease; demand; decreasing C) increase; supply; increasing D) decrease; supply; increasing Register to View AnswerQues Status: Previous Edition 3) When gold prices become more volatile, the ________ curve for gold shifts to the ________; ________ the price of gold. A) supply; right; increasing B) supply; left; increasing C) demand; right; decreasing D) demand; left; decreasing Register to View AnswerQues Status: Previous Edition 4) Discovery of new gold in Alaska will ________ the ________ of gold, ________ its price, everything else held constant. A) increase; demand; increasing B) decrease; demand; decreasing C) decrease; supply; increasing D) increase; supply; decreasing Register to View AnswerQues Status: Previous Edition 5) An increase in the expected inflation rate will ________ the ________ for gold, ________ its price, everything else held constant. A) increase; demand; increasing B) decrease; demand; decreasing C) increase; supply; increasing D) decrease; supply; increasing Register to View AnswerQues Status: Previous Edition 33 6) The price of gold should be ________ to the expected inflation rate. A) positively related B) negatively related C) inversely related D) unrelated Register to View AnswerQues Status: New 5.8 Web Appendix 3: Loanable Funds Framework 1) In the loanable funds framework, the ________ curve of bonds is equivalent to the ________ curve of loanable funds. A) demand; demand B) demand; supply C) supply; supply D) supply; equilibrium Register to View AnswerQues Status: Previous Edition 2) In the loanable funds framework, the ________ is measured on the vertical axis. A) price of bonds B) interest rate C) quantity of bonds D) quantity of loanable funds Register to View AnswerQues Status: Previous Edition 34

Find millions of documents on Course Hero - Study Guides, Lecture Notes, Reference Materials, Practice Exams and more. Course Hero has millions of course specific materials providing students with the best way to expand their education.

Below is a small sample set of documents:

UNI - EDPSYCH - 2017
EDPSYCH 2017 EXPLORING TEACHINGSPRING 2012SEC 244/245Welcome to the first steps in your journey to become a reflective and effective teacher. Thiscourse will provide powerful learning experiences for those who take full advantage of theopportunities
LSU - ECON - 2035
Chapter 7 The Stock Market, the Theory of Rational Expectations, and the EfficientMarket Hypothesis7.1 Computing the Price of Common Stock1) A stockholder's ownership of a company's stock gives her the right toB) vote and be the residual claimant of a
UNI - EDPSYCH - 2017
ETS Test Centers in Iowa4 Bettendorf 3301Prometric Testing Center1035 Lincoln RdSuite 307Bettendorf, IA 52722563-359-10015 Cedar Falls - 7742University of Northern Iowa007 ITTC1204 W 23rd StCedar Falls, IA 50614319-273-60236 Iowa City - 5005
LSU - ECON - 2035
The Economics of Money, Banking, and Financial Markets, 9e (Mishkin)Chapter 9 Financial Crises and the Subprime Meltdown9.1 Factors Causing Financial Crises1) A major disruption in financial markets characterized by sharp declines in asset prices andf
UNI - EDPSYCH - 2017
THE INTERACTIONS MATRIX: A CONCEPTUAL FRAMEWORK FOR EXPANDINGINTERACTIONS AND DEVELOPING AUTONOMY IN FIELD EXPERIENCESThe Interactions Matrix was developed through collaborative conversations between PreK-12 mentor teachers from Cedar Falls and Waterloo
UNI - EDPSYCH - 2017
EDPSYCH 2017: Frequently Asked Questions1. Where can I go to fax my SING background check forms?Turn in the SING forms and $20 to the Office of Teacher Education (159A SchindlerEducation Center). We will submit the request on your behalf and will email
LSU - ECON - 2035
Econ 2035 Money, Banking, and Macroeconomic Activity, Spring 2013 Answers to Practice Midterm 2 1. The theory of PPP suggests that if one country's price level falls relative to another's, its currency should A. depr
UNI - EDPSYCH - 2017
Frequently Asked Question: Admission to Teacher EducationJuly 16, 20101Do I have to wait until I take the Pre-Professional Skills Test (PPST) to turn in myapplication to Teacher Education? No. You should turn in your application form as soon as possi
UNI - EDPSYCH - 2017
Identifying and Reflecting on Contextual Factors at Level 1As you begin your Level 1 field experience and your exploration of the profession ofteaching, it is important to understand that teaching and learning in schools is influencedby many factors an
UNI - EDPSYCH - 2017
Level I Placement Request Registration InstructionsBe sure you have arranged for at least ONE 4- hour block in your schedule for this experience, which allowsone hour for transportation and three hours for participation in the classroom each week.1. Go
UNI - EDPSYCH - 2017
DIRECTIONS -> PLEASE READ THIS PAGE FIRST!Completing a self-assessment of ones own professional dispositions can be challenging. Most people tendto think of themselves as good people in general and often overlook instances in which they behaved lesstha
UNI - EDPSYCH - 2017
EDPSYCH 2017 Exploring TeachingDaphne Schuchart, Instructordschucha@uni.eduPhone: 319-296-5578Office: Price Lab School 114HUNI Field ExperiencesAt UNI, teacher education involves successful completion of a comprehensive program of studies. Thisprog
UNI - EDPSYCH - 2017
Week 1 and Week 2 Interactions Log and Reflections: Classroom and StudentContextPART 1: Interactions Log: Briefly log your interactions and activities in your first twoweeks of experience, especially in the yellow areas of the table. A bulleted list ra
UNI - EDPSYCH - 2017
Week 3, 4, 5 & 6 Interactions Log and Reflections: Instructional Routines, LessonElements, and Classroom ManagementPART 1: Interactions Log Briefly log your interactions and activities in weeks 3-6 ofyour field experience, especially in the yellow area
UNI - EDPSYCH - 2017
Level 1 Exit Survey: Spring 2012Please give a brief response to the following questions. Thank you.1. Which part(s) of the Level 1 course did you find most helpful?2. Which of the following activities did you engage in during your field experience?Yes
UNI - EDPSYCH - 2017
Preparing for the Pre-Professional Skills Test (PPST)The State of Iowa Board of Educational Examiners (BOEE) requires that youpass a basic skills test to be admitted to the teacher education program. UNI haschosen the PPST as its assessment tool.To pa
UNI - EDPSYCH - 2017
UniversityofNorthernIowaApplicationforAdmissiontoTeacherEducationDirections:Thisapplicationmustbetyped,completedonacomputer,orprintedinink.FailuretoprovideaccurateinformationwillresultindenialofadmissiontotheUniversityofNorthern IowaTeacherEducationPr
UNI - EDPSYCH - 2017
Week1: RemindersHere are a few reminders of what you should be doing over the next few days.1. Sign up for your field experience placement via the Price Lab School website:<http:/www.uni.edu/iowa-rds/>. Remember that you should do that this week (as so
UNI - TESOL - 5720
Assignments and GradingGrades:Homework assignmentsExams I and IIPanel and reflectionResearch paperPresentation on paper10 points each 30 points total15 points each 30 points total10 and 515 points total15 points10 points100 pointsGrade scale
UNI - TESOL - 5720
TESOL 4720-01/5720-01Bilingual EducationRobertsSpring 2013The exam consists of three sections: Identification of key terms, Short Essay, LongerEssay. Each section provides items/questions for you to choose from. I will only grade upto the required n
UNI - TESOL - 5720
BILINGUAL EDUCATIONSPRING 2013COURSE SCHEDULEWEEKOne, TwoJan 15, 17Jan 22, 24UNITONELanguage, Diversity, EducationTopics:4 World Langs5 Culture & Identity6 Mono/Bilingualism7 Endangered LangsAssignments:8 deJong chapters 1, 29 Santa Ana I
UNI - TESOL - 5720
Assignments and GradingGrades:Homework assignmentsMidterm and final examsPanel and reflectionResearch paperPresentation on paperJan 24 Panel AReflection due 1/29Jan 31 Assignment 1Feb 7 Panel BReflection due 2/12Feb 14 Assignment 2 dueFeb 21
UNI - TESOL - 5720
Bilingual Education in the Public SchoolsGoals & ObjectivesThis course addresses the development of bilingualism/multilingualism and its impact onindividuals, educational systems, and society. Different models of bilingual educationwill be introduced
UNI - TESOL - 5720
Panel Discussion AssignmentsPanel A January 24Participants: Karl Baresel, Karl Kramer, Dustin Miller, Shawna SchrockTopic: Raising children bilinguallyPanel B February 7Participants: Ally Berry, Joseph Lamp, Nehemiah Nelson, Latashia SheetsTopic: Di
UNI - TESOL - 5720
PoliciesCoffee, tea, soda are all welcome. Please do not bring food to class.Absences More than 10 minutes late is counted as an absence; 3 unexcused absences areallowed per semester. It is the participants responsibility to get class notes andassignm
UNI - TESOL - 5720
These are national TESOL/NCATE standards and Iowa ESL requirements that apply tothe Bilingual Education class. I have highlighted the Iowa requirements that pertain.STANDARDSDomain 1. LanguageCandidates know, understand, and use the major theories and
UNI - TESOL - 5720
Bilingual Education in the Public SchoolsTESOL 4720-01/5720-01 / Spring 2013Tues/Thurs 11:00-12:15, Lang 8Dr. Cheryl RobertsOffice: Baker 202E-mail: robertsc@uni.eduOffice hours TBAPurpose of the CourseThis course addresses the development of bili
Missouri (Mizzou) - ECON - 1000
American Economic AssociationThe Role of Cognitive Skills in Economic DevelopmentAuthor(s): Eric A. Hanushek and Ludger WoessmannReviewed work(s):Source: Journal of Economic Literature, Vol. 46, No. 3 (Sep., 2008), pp. 607-668Published by: American E
Missouri (Mizzou) - ECON - 1000
The Race between Education and Technology: TheEvolution of U.S. Educational Wage Differentials, 1890 to2005Claudia Goldin, Lawrence F. KatzU.S.educationalandoccupationalwagedifferentialswereexceptionallyhighatthedawnofthetwentiethcenturyandthendecrea
Missouri (Mizzou) - ECON - 1000
researchEducation andIts not just going to school, but learningEven before and certainly ever since the1983 release of A Nation at Risk by theNational Commission on Excellence inEducation, national economic competitiveness has been offered as a pri
American University of Nigeria - ECON - 1000
TheRoleofCognitiveSkillsInEconomicDevelopmentHanushek/WoessmanTheroleofimprovedschooling,acentralpartofmostdevelopmentstrategies,hasbecomecontroversialbecauseexpansionofschoolattainmenthasnotguaranteedimprovedeconomicconditions.Thispaperreviewstherol
Aarhus Universitet, Aarhus - ECON - 1000
Schooling, Labor Force Quality, and Economic GrowthEric A. Hanushek, Dongwook KimHumancapitalisalmostalwaysidentifiedasacrucialingredientforgrowingeconomies,butempiricalinvestigationsofcrossnationalgrowthhavedonelittletoclarifythedimensionsofrelevanth
Abilene Christian University - ECON - 1000
Does Compulsory School Attendance Affect Schooling and Earnings? Author(s): Joshua D. Angrist and Alan B. Krueger Source: The Quarterly Journal of Economics, Vol. 106, No. 4 (Nov., 1991), pp. 979-1014 Published by: The MIT Press Stable URL: http:/www.jsto
Abilene Christian University - ECON - 1000
Solutions to Chapter 2 Exercises SOLVED EXERCISESS1. (a) Assuming a sufficient supply of yogurt is available for all shoppers, each shopper issimply making a decision. If some flavors of yogurt were in short supply, then it would be a game, because shop
Adelphi - ECON - 1000
Aberystwyth University - ECON - 1000
Solutions to Chapter 3 Exercises SOLVED EXERCISESS1. (a) There is one initial node (I) for Hansel making the first move; three decision nodes (D)including the initial node, which represent the points where either Hansel or Gretel make a decision; and si
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 4 Exercises SOLVED EXERCISESS1. False. A dominant strategy yields you the highest payoff available to you against each of youropponents strategies. Playing a dominant strategy does not guarantee that you end up with the highest of a
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 5 Exercises SOLVED EXERCISESS1. (a) Rs best-response rule is given by y = 10x x. L spends $16 million, so x = 16. ThenRs best response is y = 1016 16 = 10(4) 16 = 40 16 = 24, or $24 million. (b) simultaneously: x = 10(10x x)1/2 10x
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 6 Exercises SOLVED EXERCISESS1. Second-mover advantage. In a sequential game of tennis, the second mover will be able torespond best to the first movers chosen action. Put another way, the second mover will be able to exploit the in
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 7 Exercises SOLVED EXERCISESS1. False. A players equilibrium mixture is devised in order to keep her opponent indifferentamong all of her (the opponents) possible mixed strategies; thus, a players equilibrium mixture yields the oppo
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 8 Exercises SOLVED EXERCISESS1. False. A players equilibrium mixture is devised in order to keep her opponent indifferent amongall of her (the opponents) possible mixed strategies; thus, a players equilibrium mixture yields the oppo
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 9 Exercises SOLVED EXERCISESS1. (a) Your neighbor has a sure income of $100,000. In addition, under the insurancecontract, he will receive x when you have a good year and pay you $60,000 when you have a bad year. The lowest value of
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 10 Exercises SOLVED EXERCISESS1. The statement is true because promises, when successfully used as strategic moves, require thatyou follow through on the promised action; you will not promise an arbitrarily large reward. You may thr
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 11 Exercises SOLVED EXERCISESS1. False. The players are not assured that they will reach the cooperative outcome. Rollbackreasoning shows that the subgame-perfect equilibrium of a finitely played repeated prisoners dilemma will enta
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 12 Exercises SOLVED EXERCISESS1. (a) (b) The number choosing X should decrease to move the population division between X and Because the line for action X is above the line for action Y when 100 people choose X,Y away from the unsta
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 13 Exercises SOLVED EXERCISESS1. (a) The payoff table for the two types of travelers is: High High Low 100, 100 70, 30 Low 30, 70 50, 50(b)The graph is:(c)There are three possible equilibria: a stable monomorphic equilibrium of a
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 14 Exercises SOLVED EXERCISESS1. Some examples of incentive schemes that help induce more care on the part of policy holders: 1. The insurer can provide a multiyear contract or otherwise establishes an ongoing relationship in which f
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 15 Exercises SOLVED EXERCISESS1. (a) In the pure-threat case, the unions expected payoff is 50(1 p) 100p = 50 150p. Theunions expected payoff goes to zero for p = 1/3 and is negative for p > 1/3. Thus the pure threat is too big from
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 16 Exercises SOLVED EXERCISESS1. Under truthful voting, A should match Geology and Sociology in the first vote, with the winner (Geology) to face Philosophy in the second round. Under strategic voting, A should match Philosophy and S
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 17 Exercises SOLVED EXERCISESS1. The painter can compare her estimated cost to a jobs true cost only when she does the job. Butthe painter does a job only when she agrees (through the bidding process) to do it for less than anybody
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 18 Exercises SOLVED EXERCISESS1. The father and daughter were implicitly negotiating about how much freedom from parentalcontrol she would have. The fathers BATNA was low: breakdown of negotiation would lead to a tantrum or a scene
Missouri (Mizzou) - ECON - 1000
Solutions to Chapter 19 Exercises SOLVED EXERCISESS1. (a) The existence of buyer B2 means that buyer B1 will not be able to buy at any price below200. If B1 tried to strike a deal at (for example) 190, B2 could offer to pay 191; if B2 bought at that pri
Missouri (Mizzou) - ECON - 1000
Professor Rod GarrattECON 171FinalJune 6, 2011This exam is worth a total of 50 Points. You have 2 hours to complete this exam.Good Luck!1. Use successive elimination of dominated strategies to solve the following game.Show the order in which you el
Missouri (Mizzou) - ECON - 1000
ECON 212 FC HOMEWORK 1 ANSWERSJOHN HILLAS UNIVERSITY OF AUCKLANDProblem 1. (Dixit and Skeath, Chapter 1, Exercise 4) You and a rival are engaged in a game in which there are three possible outcomes: you win, your rival wins (you lose) and the two of you
Missouri (Mizzou) - ECON - 1000
b) The player who wins is going to be the one that can leave just one stick in one of thepiles. If player 2 takes exactly the same amount of sticks [as] player one, from theopposite pile, and when a pile gets to 1 stick he just takes all the sticks from
Missouri (Mizzou) - ECON - 1000
Professor Rod GarrattECON 171MidtermApril 27, 2011This exam is worth a total of 40 Points. You have 1 hour and 15 minutes to completethis exam. Good Luck!1. Consider the game of Marienbad which, like the game of Nim, is zero-sum (thereis a winner a
Missouri (Mizzou) - ECON - 1000
Missouri (Mizzou) - ECON - 1000
NBER WORKING PAPER SERIESTHE VIRTUES OF THE PAST:EDUCATION IN THE FIRST HUNDREDYEARS OF THE NEW REPUBLICClaudia GoldinLawrence F. KatzWorking Paper 9958http:/www.nber.org/papers/w9958NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts AvenueC
Missouri (Mizzou) - ECON - 1000
Missouri (Mizzou) - ECON - 1000
K-12 Public School Finance in Missouri: An OverviewMichael Podgursky and Matthew G. SpringerThe level and distribution of spending for public K-12 education remains a contentious matter of policy in many states because of increasing expectations for sch
Missouri (Mizzou) - ECON - 1000