money-and-bank-test-bank-chap05

1TheEconomicsofMoney,Banking,andFinancialMarkets,9e(Mishkin)Chapter5TheBehaviorofInterestRates5.1DeterminantsofAssetDemand1)PiecesofpropertythatserveasastoreofvaluearecalledA)assets.B)unitsofaccount.C)liabilities.D)borrowings.Answer:AQuesStatus:New2)Ofthefourfactorsthatinfluenceassetdemand,whichfactorwillcausethedemandforallassetstoincreasewhenitincreases,everythingelseheldconstant?A)wealthB)expectedreturnsC)riskD)liquidityAnswer:AQuesStatus:PreviousEdition3)Ifwealthincreases,thedemandforstocks________andthatoflong-termbonds________,everythingelseheldconstant.A)increases;increasesB)increases;decreasesC)decreases;decreasesD)decreases;increasesAnswer:AQuesStatus:PreviousEdition4)Everythingelseheldconstant,adecreaseinwealthA)increasesthedemandforstocks.B)increasesthedemandforbonds.C)reducesthedemandforsilver.D)increasesthedemandforgold.Answer:CQuesStatus:Revised5)Anincreaseinanasset'sexpectedreturnrelativetothatofanalternativeasset,holdingeverythingelseconstant,________thequantitydemandedoftheasset.A)increasesB)decreasesC)hasnoeffectonD)erasesAnswer:AQuesStatus:New26)Everythingelseheldconstant,iftheexpectedreturnonABCstockrisesfrom5to10percentandtheexpectedreturnonCBSstockisunchanged,thentheexpectedreturnofholdingCBSstock________relativetoABCstockandthedemandforCBSstock________.A)rises;risesB)rises;fallsC)falls;risesD)falls;fallsAnswer:DQuesStatus:PreviousEdition7)Everythingelseheldconstant,iftheexpectedreturnonU.S.Treasurybondsfallsfrom10to5percentandtheexpectedreturnonGEstockrisesfrom7to8percent,thentheexpectedreturnofholdingGEstock________relativetoU.S.TreasurybondsandthedemandforGEstock________.A)rises;risesB)rises;fallsC)falls;risesD)falls;fallsAnswer:AQuesStatus:PreviousEdition8)Ifhousingpricesareexpectedtoincrease,then,otherthingsequal,thedemandforhouseswill________andthatofTreasurybillswill________.A)increase;increaseB)increase;decreaseC)decrease;decreaseD)decrease;increaseAnswer:BQuesStatus:Revised9)Ifstockpricesareexpectedtodropdramatically,then,otherthingsequal,thedemandforstockswill________andthatofTreasurybillswill________.A)increase;increaseB)increase;decreaseC)decrease;decreaseD)decrease;increaseAnswer:DQuesStatus:PreviousEdition310)Everythingelseheldconstant,iftheexpectedreturnonRSTstockdeclinesfrom12to9percentandtheexpectedreturnonXYZstockdeclinesfrom8to7percent,thentheexpectedreturnofholdingRSTstock________relativetoXYZstockanddemandforXYZstock________.A)rises;risesB)rises;fallsC)falls;risesD)falls;fallsAnswer:CQuesStatus:PreviousEdition11)Everythingelseheldconstant,iftheexpectedreturnonU.S.Treasurybondsfallsfrom8to7percentandtheexpectedreturnoncorporatebondsfallsfrom10to8percent,thentheexpectedreturnofcorporatebonds________relativetoU.S.Treasurybondsandthedemandforcorporatebonds________.A)rises;risesB)rises;fallsC)falls;risesD)falls;fallsAnswer:DQuesStatus:PreviousEdition12)Anincreaseintheexpectedrateofinflationwill________theexpectedreturnonbondsrelativetothethaton________assets,everythingelseheldconstant.A)reduce;financialB)reduce;realC)raise;financialD)raise;realAnswer:BQuesStatus:PreviousEdition13)Iffluctuationsininterestratesbecomesmaller,then,otherthingsequal,thedemandforstocks________andthedemandforlong-termbonds________.A)increases;increasesB)increases;decreasesC)decreases;decreasesD)decreases;increasesAnswer:DQuesStatus:PreviousEdition14)Ifthepriceofgoldbecomeslessvolatile,then,otherthingsequal,thedemandforstockswill________andthedemandforantiqueswill________.A)increase;increaseB)increase;decreaseC)decrease;decreaseD)decrease;increaseAnswer:CQuesStatus:PreviousEdition415)Ifbrokeragecommissionsonbondsalesdecrease,then,otherthingsequal,thedemandforbondswill________andthedemandforrealestatewill________.A)increase;increaseB)increase;decreaseC)decrease;decreaseD)decrease;increaseAnswer:BQuesStatus:PreviousEdition16)Ifgoldbecomesacceptableasamediumofexchange,thedemandforgoldwill________andthedemandforbondswill________,everythingelseheldconstant.A)decrease;decreaseB)decrease;increaseC)increase;increaseD)increase;decreaseAnswer:DQuesStatus:PreviousEdition17)ThedemandforPicassopaintingsrises(holdingeverythingelseequal)whenA)stocksbecomeeasiertosell.B)peopleexpectaboominrealestateprices.C)Treasurysecuritiesbecomeriskier.D)peopleexpectgoldpricestorise.Answer:CQuesStatus:Revised18)Thedemandforsilverdecreases,otherthingsequal,whenA)thegoldmarketisexpectedtoboom.B)themarketforsilverbecomesmoreliquid.C)wealthgrowsrapidly.D)interestratesareexpectedtorise.Answer:AQuesStatus:Revised19)YouwouldbelesswillingtopurchaseU.S.Treasurybonds,otherthingsequal,ifA)youinherit$1millionfromyourUncleHarry.B)youexpectinterestratestofall.C)goldbecomesmoreliquid.D)stockpricesareexpectedtofall.Answer:CQuesStatus:Revised520)YouwouldbemorewillingtobuyAT&Tbonds(holdingeverythingelseconstant)ifA)thebrokeragecommissionsonbondsalesbecomecheaper.B)interestratesareexpectedtorise.C)yourwealthhasdecreased.D)youexpectdiamondstoappreciateinvalue.Answer:AQuesStatus:Revised21)Thedemandforgoldincreases,otherthingsequal,whenA)themarke