A decrease in the expected rate of inflation causes

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47) A decrease in the expected rate of inflation causes the demand curve for bonds to _____ and the supply curve of bonds to _____ A) fall; fall. B) fall; rise. C) rise; fall. D) rise; rise. Answer: C 48) When the economy slips into a recession, normally the demand for bonds _____, the supply of bonds _____, and the interest rate _____ 45 49) When the economy enters into a boom, normally the demand for bonds _____, the supply of bonds _____, and the interest rate _____ Figure 4-2 50) In Figure 4-2, one possible explanation for the increase in the interest rate from i 1 to i 2 is 51) In Figure 4-2, one possible explanation for the increase in the interest rate from i 1 to i 2 is A) an increase in economic growth. B) an increase in government budget deficits. C) a decrease in government budget deficits. D) a decrease in economic growth. E) a decrease in the riskiness of bonds relative to other investments. Answer: A 52) In Figure 4-2, one possible explanation for a decrease in the interest rate from i 2 to i 1 is 46
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53) In Keynes’s liquidity preference framework, individuals are assumed to hold their wealth in two forms: 54) In his liquidity preference framework, Keynes assumed that money has a zero rate of return; thus,
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