_____6. A rise in the market interest rates on bonds would result: in a capital
ID: 2495457 • Letter: #
Question
_____6. A rise in the market interest rates on bonds would result:
in a capital loss on previously existing bonds.
an increase in demand for previously existing bonds.
in an increase in the transaction demand for money.
in a capital gain on previously existing bonds.
in a increase in the price of previously existing bonds.
_____7. For a given interest rate, money demand:
will be constant.
will be fixed.
will increase with increased income.
will decrease with increased income.
will be dependent on the level of money supply.
_____8. According to Keynes’s theory high unemployment during the 1930’s in most industrialized countries was a result of a deficiency in:
income.
real wages.
government spending.
aggregate demand.
business investment.
_____9. An example of Keynesian expansionary fiscal policy action would be:
an increase in personal tax rates designed to lower disposable income.
Lowering interest rates in order to stimulate business investment.
An increase in personal saving rates due to an increase in the yield on bonds.
An increase in government spending on public works as a cure for unemployment.
An increase in the supply of money in order to increase present consumer consumption.
_____10. Because the LM schedule slopes upward to the right higher levels of income will require equilibrium in the money market to occur at:
higher interest rates.
higher levels of output.
lower interest rates.
lower levels of output.
higher levels of money supply.
Explanation / Answer
Dear Student, only one question is allowed at a time.
6)
Interest rates and bind prices are inversely related. Higher the interest rate, lower is the bond price and vice versa.
A rise in the market interest rates on bonds would result in a fall in the price of previously bought bonds and will result in a capital loss.
So, option A is the correct option.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.