If stock prices are expected to drop dramatically, then, other things equal, the demand for stocks will ________ and that of Treasury bills will ________.
A. increase; increase
B. increase; decrease
C. decrease; decrease
D. decrease; increase
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The economist Irving Fisher, after whom the Fisher effect is named, explained why interest rates ________ as the expected rate of inflation ________, everything else held constant.
A. rise; increases
B. rise; stabilizes
C. fall; stabilizes
D. fall; increases
When the price level falls, the ________ curve for nominal money ________, and interest rates ________, everything else held constant.
A. demand; decreases; fall
B. demand; increases; rise
C. supply; increases; rise
D. supply; decreases; fall
Whenpeoplebegintoexpectarunupinlargestockmarket,thedemandcurveforbondsshiftstothe_____andtheinterestrate_____.
A. right;rises
B. right;falls
C. left;falls
D. left;rises
IftheexpectedreturnonRSTstockfallsfrom8to5percentandtheexpectedreturnonXYZstockrisesfrom3to4percent,thentheexpectedreturnofholdingXYZstock______relativetoRSTstockanddemandforXYZstock______.
A. rises;rises
B. rises;falls
C. falls;rises
D. falls;falls