When the Central Bank ________ interest rates, bond prices ________. Select one: a. raises; remain the same b. lowers; remain the same c. raises; rise d. lowers; rise
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- An increase in perceived wealth due to an increase in stock prices will cause: Select one: a. right-shift of the aggregate demand curve. b. movement along the aggregate demand curve. c. left-shift of the aggregate supply curve. d. right-shift of the aggregate supply curve.Suppose that when the central bank increases the interest rate by 1 percentage point that investment spending falls by $100 millon in Ecoland. a. If the marginal propensity to spend is 0.75, what will be the total change in real GDP of an increase in the interest rate of 1 percentage point? Assume that the price level is held constant. Explain. b. What happens to bond prices? Explain in words. c. How does the effect of monetary policy depend on the sensitivity of investment to the interest rate? Explain. d. What effect will the increase in interest rates have on asset prices and wealth? How might this also influence spending and thus GDP?What is the sequence of events from a rise in the federal funds rate target range to a change in the inflation rate? Other short-term interest rates _______. A. and the long-term interest rate rise the same day B. rise the same day, but it takes a few months for the supply of loanable funds to decrease C. rise within a few weeks, but the long-run interest rate rises almost immediately D. rise the same day, but it takes a few months for the supply of loanable funds to increase
- What does the interest rate effect say? a. Interest rates causes inflation to go down b. Interest rates causes aggregate demand to have an upward slope c. as prices go up, interest rates will control inflation and prevent it from increasing d. when prices for outputs rise, the same purchases will take more money or credit to accomplishWhen the Fed sells securities in the open market, the monetary base _______ and the interest rate _______. A. decreases; falls B. increases; rises C. decreases; rises D. increases; fallsPlease answer the correct answer jus need B Don't answer by pen paper please ASAP. Use the graphical bond market model to answer the following questions. In each case, support your answer with a figure, and explain your answer. Label each figure clearly. a. What is the effect of an increase in wealth on interest rates? b. What is the effect of a decrease in expected inflation on interest rates? c. Why does an expectation of an upcoming interest rate hike by the Federal Reserve cause bond prices to fall? Just need B.
- If the Fed increases the money supply, in the short run interest rates will ________ and investment spending will __________. Rise; go down Decline; go down Rise; increase Decline; increaseWhen the Federal Reserve buys government securities from a bank, the money supply ________ and interest rates ________. increases; rise decreases; rise decreases; fall increases; fallBy lowering the interest rate, the Fed makes it _______ costly for the banks to borrow monetary base and the interest rate _______. A. less; falls B. more; falls C. more; rises D. less; rises
- What might rising term spreads suggest Select one: a. that markets anticipate future interest rates to rise in the future b. that markets anticipate the demand for loans to increase in the future c. that markets anticipate more risk of default d. only A and B of the above are trueSuppose that the Federal reserve is concerned about the effects of rising stock prices on the economy. What could it do? a. buy bond to raise the interest rate b. buy bonds to lower the interest rate INCORRECT c. sell bonds to raise the interest rate INCORRECT d. sell bonds to lower the interest rate I thought the answer was B. BUT My results tell me option B. is incorrect.... Another chegg question shows option C. as incorrect as well... Please help?Interest rate 3 The graph below illustrates the money demand and investment demand for the economies of Pabst and Kokanee. Pabst Kokanee a. If money supply is increased by 25, what will be the new interest rate? Round your answers to one decimal place. Pabst: % Kokanee: % b. What will be the increase in investment spending as a result of this new interest rate? Pabst: Kokanee: c. If the multiplier is 2 in each economy, what will be the increase in GDP? Pabst: Kokanee: d. In which economy would monetary policy be more effective in closing a recessionary gap? PabstKokanee 3 2 1 10 9 8 MD MS 33 Interest rate 2 1 7 6 (110,1.5) 0 70 80 90 100 110 120 10 20 30 40 50 60 70 80 90 100 Quantity of money Quantity of investment MS MD Kokanee Interest rate 3 10 9 8 2 1 70 90 100 110 120 130 0 Quantity of money 10 20 30 40 50 60 70 80 90 100 Quantity of investment