A rightward shift of the money supply ________
A) may come about from an increase in the quantity of money supplied by the Federal Reserve
B) may come about from a decrease in the price level
C) leads to a decrease in interest rates ceteris paribus
D) all of the above
E) none of the above
D
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When PPP does not hold in the short run, economists have developed an alternative short run explanatory theory based on the idea that:
a. currency values are different from other prices, since currencies are not considered assets. b. currency values are influenced in the short run because they serve as short-term assets. c. currency values will eventually result in PPP over time, so no short-run theory is needed. d. currency values are set by government entities and the IMF so the value often does not result in PPP.
The rate of return on bonds is lower than on stocks over time because
A) bond holders cannot diversify. B) bonds have a lower standard deviation in returns. C) stocks have less non-diversifiable risks than bonds. D) bonds are subject to more random risks than stocks.