If, while you are holding a coupon bond, the interest rates on other similar bonds fall, you can be sure that
A) the coupon payments on your bond will fall.
B) the market price of your bond will rise.
C) the market price of your bond will fall.
D) the par value of your bond will rise.
B
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Suppose that the Fed implements expansionary monetary policy that raises aggregate demand, but individuals incorrectly anticipate the policy measure (bias downward). According to new classical theory, in the short run the price level would ____________ and Real GDP would ______________. In the long run, new classical theory would predict that the price level would ___________compared to its
original long-run equilibrium level and that Real GDP would ____________. A) rise; decline; rise; remain unchanged B) rise; rise; rise; remain unchanged C) rise; decline; remain unchanged; rise D) fall; rise; remain unchanged; rise
Which of the following can create demand-pull inflation?
A. Excessive aggregate spending. B. Sharply rising oil prices. C. Higher labor costs. D. Recessions and depressions.