Question

1. There is an increase in bond demand. Holding other factors constant the, a. bond prices...

1. There is an increase in bond demand. Holding other factors constant the,

a. bond prices will increase

b. interest rates will increase

c. loanable funds supply decreases

d. loanable funds demanded decreases

2. There is a decrease in bond demand. Holding other factors constant, then

a. bond prices decrease

b. interest rates decrease

c. loanable funds supply increases

d. loanable funds demanded decreases

3. The country is currently experiencing 7 consecutive months of gradually increasing inflation. Experts predict at least another 6 months of the same. Wich of the following is likely to occur?

a. bond demand decreases and loanable funds supply increases

b. bond demand decreases and loanable funds supply decreases

c. bond prices increases and interest rates decrease

d. bond prices decrease and interest rates increase

e. both a and d

f. both b and d

4. Federal and state governments will reduce deficit spending by 1.8 trillion this fiscal year. This action will cause which of the following to occur?

a. bond supply to increase

b. an increase in loanable funds demanded

c. interest rates decrease

d. bond prices decrease

e. bond demand to increase

Business   Economics   
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Homework Answers

Answer #1

a) As the demand for the bonds increase it will increase the price of the bonds. The answer is "A".

b) As the demand for the bonds decrease it will decrease the price of the bond. The answer is "A".

c) An increase in the inflation will decrease the supply of the loanable fund and increase the interest rate in the economy. it will also decrease the demand for the bonds. the answer is "F" both B and D are correct.

d) reducing deficit spending means a fall in the interest rate it will increase the supply of the loanable funds in the market. The answer is "C".  

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