Suppose that a bond having no expiration date has a face value of $5000 and pays a fixed amount of interest of $500 annually. Compute and enter in the spaces provided the effective interest rate (to one decimal place) that a bond buyer could receive at the new bond price.

Perfect competition is characterized by

A) many buyers and sellers. B) a small number of firms. C) differentiated products of firms in the industry. D) high barriers to entry.

An open-market sale of T-bonds by the Fed causes the money supply to

A. fall and bond prices to fall. B. rise and bond prices to fall. C. rise and bond prices to rise. D. fall and bond prices to rise.