8/3/2019 FBI TBCh04
1/9
C
hapter4
TheBehaviorofInterestRat
es
4
.1MultipleChoiceQuestions
1)Asthepriceofabond_____
andtheexpecte
dreturn_____,
bondsbecomemore
attractivetoinvestorsandthequantitydemandedrises.
A)
falls;rises
B)
falls;falls
C)
rises;rises
D)
rises;falls
Answer:A
2)Thesupplycurveforbondshastheusualupwardslope,indicatingthatastheprice
_____,
ceterisparibus,the_____
increases.
A)
falls;supply
B)
falls;quantitysupplied
C)
rises;supply
D)
rises;quantitysupplied
Answer:D
3)Whenthepriceofabondisabovetheequilibriumprice,thereisanexcess_____
for(of)bondsandthepricewill_____
A)
demand;rise.
B)
demand;fall.
C)
supply;fall.
D)
supply;rise.
Answer:C
4)Whenthepriceofabondisbelowtheequilibriumprice,thereisanexcess_____
for(of)bondsandthepricewill_____
A)
demand;rise.
B)
demand;fall.
C)
supply;fall.
D)
supply;rise.
Answer:A
5)Whenthepriceofabondis_____
theequilibriumprice,thereisanexcesssupply
ofbondsandthepricewill_____
A)
above;rise.
B)
above;fall.
C)
below;fall.
D)
below;rise.
Answer:B
37
6)Whenthepr
iceofabondis_____
theequilibriumprice,thereisanexcessdemand
ofbondsandthepricewill_____
A)
above;
rise.
B)
above;
fall.
C)
below;
fall.
D)
below;
rise.
Answer:D
7)Whentheinterestrateonabondisabovetheequilibriuminte
restrate,inthebond
marketthere
isexcess_____
andtheinterestratewill_____
A)
demand;rise.
B)
demand;fall.
C)
supply;fall.
D)
supply;rise.
Answer:B
8)Whentheinterestrateonabondisbelowtheequilibriuminte
restrate,inthebond
marketthere
isexcess_____
andtheinterestratewill_____
A)
demand;rise.
B)
demand;fall.
C)
supply;fall.
D)
supply;rise.
Answer:D
9)Whentheinterestrateonabondis______
theequilibriumin
terestrate,inthebond
marketthere
isexcess_____
andtheinterestratewill_____
A)
above;
demand;rise.
B)
above;
demand;fall.
C)
below;
supply;fall.
D)
above;
supply;rise.
Answer:B
10)Whentheinterestrateonabondis_____
theequilibriuminterestrate,inthebond
marketthere
isexcess_____
andtheinterestratewill_____
A)
below;
demand;rise.
B)
below;
demand;fall.
C)
below;
supply;fall.
D)
above;
supply;rise.
Answer:A
11)Whenthede
mandforbonds______
orthesupplyofbonds_____,interestraterise.
A)
increas
es;increases.
B)
increas
es;decreases.
C)
decreases;decreases.
D)
decreases;increases.
Answer:D
38
8/3/2019 FBI TBCh04
2/9
8/3/2019 FBI TBCh04
3/9
2
4)Whentheexpectedinflationratedecreases,thedemandforbonds_____,
thesupply
ofbonds_____,
andtheinterestrate______
A)
increases;increases;rises.
B)
decreases;decreases;falls.
C)
increases;decreases;falls.
D)
decreases;increases;rises.
Answer:C
2
5)Whenbondinterestratesbecomemorevolatile,thedemandforbonds_____
and
theinterestrate_____
A)
increases;rises.
B)
increases;falls.
C)
decreases;falls.
D)
decreases;rises.
Answer:D
2
6)Whenbondinterestratesbecomelessvolatile,thedemandforbonds_____
andthe
interestrate_____
A)
increases;rises.
B)
increases;falls.
C)
decreases;falls.
D)
decreases;rises.
Answer:B
2
7)Whenpricesinthestockmarketbecomemoreuncertain,thedemandcurvefor
bondsshiftstothe_____
andtheinterestrate_____
A)
right;rises.
B)
right;falls.
C)
left;falls.
D)
left;rises.
Answer:B
2
8)Whenstockpricesbecomelessvolatile,t
hedemandcurveforbondsshiftstothe
_____
andtheinterestrate_____
A)
right;rises.
B)
right;falls.
C)
left;falls.
D)
left;rises.
E)
more;right;rises.
Answer:D
41
29)Whenbondsbecomemorewidelytraded,andasaconsequen
cethemarketbecomes
moreliquid,t
hedemandcurveforbondsshiftstothe_____a
ndtheinterestrate
_____
A)
right;rises.
B)
right;falls.
C)
left;falls.
D)
left;ris
es.
Answer:B
30)Whenbondsbecomelesswidelytraded,andasaconsequencethemarketbecomes
lessliquid,thedemandcurveforbondsshiftstothe_____an
dtheinterestrate
_____
A)
right;rises.
B)
right;falls.
C)
left;falls.
D)
left;ris
es.
Answer:D
31)Factorsthat
causethedemandcurveforbondstoshifttotheleftinclude
A)
anincreaseintheinflationrate.
B)
anincreaseintheliquidityofstocks.
C)
adecre
aseinthevolatilityofstockprices.
D)
alloftheabove.
E)
noneoftheabove.
Answer:D
32)Factorsthat
causethedemandcurveforbondstoshifttotheleftinclude
A)
adecre
aseintheinflationrate.
B)
anincreaseinthevolatilityofstockprices.
C)
anincreaseintheliquidityofstocks.
D)
alloftheabove.
E)
only(A
)and(B)oftheabove.
Answer:C
33)Duringaneconomicexpansion,thesupplyofbonds_____a
ndthesupplycurve
shiftstothe
_____
A)
increas
es,left.
B)
increas
es,r
ight.
C)
decreases,left.
D)
decreases,right.
Answer:B
42
8/3/2019 FBI TBCh04
4/9
8/3/2019 FBI TBCh04
5/9
8/3/2019 FBI TBCh04
6/9
8/3/2019 FBI TBCh04
7/9
8/3/2019 FBI TBCh04
8/9
8/3/2019 FBI TBCh04
9/9