A contractionary policy can be thought of as:
a. a decrease in the money supply
b. an increase in the money supply
c. an increase in the interest rate

If 1-year interest rates for the next five years are expected to be 4, 2, 5, 4, and 5 percent, and the 5-year term premium is 1 percent, than the 5-year bond rate will be

A) 2 percent. B) 3 percent. C) 4 percent. D) 5 percent.

Mary is a low-risk applicant for a loan at a bank, while John is a high-risk applicant. If the bank increases the interest rates it charges on loans, _____

a. John is likely to leave the market for loans b. the problem of moral hazard will prevent John from getting a loan c. the commons problem will prevent Mary from getting a loan d. Mary is likely to leave the market for loans e. both Mary and John will leave the market for loans