When people begin to expect a large stock market

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31) When people begin to expect a large stock market decline, the demand curve for bonds shifts to the ________ and the interest rate ________. 31) A) right; falls B) right; rises C) left; rises D) left; falls
32) Factors that cause the demand curve for bonds to shift to the left include 32)
33) A decrease in the expected rate of inflation causes the demand for bonds to ________ and the supply of bonds to ________. 33)
34) If income tax rates were lowered, then 34)
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35) According to the expectations theory of the term structure, 35) A) the interest rate on long - term bonds will exceed the average of expected future short - term interest rates. B) buyers of bonds prefer short - term to long - term bonds. C) interest rates on bonds of different maturities move together over time. D) all of the above. E) only A and B of the above.
36) According to the expectations theory of the term structure, 36)
37) If the expected path of one - year interest rates over the next four years is 5 percent, 4 percent, 2 percent, and 1 percent, then the pure expectations theory predicts that today's interest rate on the four - year bond is 37)
38) According to the market segmentation theory of the term structure, 38)
39) According to the liquidity premium theory of the term structure, 39) A) because buyers of bonds may prefer bonds of one maturity over another, interest rates on bonds of different maturities do not move together over time. B) because of the positive term premium, the yield curve cannot be downward - sloping. C) the interest rate on long - term bonds will equal an average of short - term interest rates that people expect to occur over the life of the long - term bonds plus a term premium. D) all of the above. E) only A and B of the above.

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