The supply of bonds rises, ceteris paribus, and the price of bonds __________. This __________ the interest rate and __________ the quantity demanded of money
A) rises; raises; lowers
B) falls; lowers; raises
C) rises; lowers; lowers
D) falls; raises; lowers
E) falls; lowers; lowers
D
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The government can continuously issue new bonds to pay the interest on its outstanding bonds so long as
A) the real GDP growth rate exceeds the real interest rate. B) the real interest rate exceeds the real GDP growth rate. C) the real interest rate exceeds the nominal interest rate. D) the nominal interest rate exceeds the cost of borrowing.
If firms have to account for external costs of production, then they will ________ compared with what they would do if they did not have to account for the external costs.
A. overproduce and underprice B. underproduce and overprice C. underproduce and underprice D. overproduce and overprice