When the coupon rate on newly issued bonds increases relative to older, outstanding bonds, what happens?
A) The market price of the older bond falls in the secondary market.
B) The market price of the older bond rises in the secondary market.
C) Older bonds will sell for more than their face value.
D) Older bonds can still be sold at their face value.
A
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In 2009, our current account deficit was $__________ billion.
Fill in the blank(s) with the appropriate word(s).
As a tool of monetary policy the effectiveness of the discount rate is __________ because __________
A) Limited; banks will not borrow reserves from the Fed as long as they have ample excess reserves no matter how low the discount rate goes B) Limited; banks will borrow reserves from the Fed whenever they need them as long as they have a reserve deficiency no matter how high the discount rate goes C) very effective; changes in the discount rate leads changes in money market rates and thus assures that the injections and withdrawals of reserves from the banking system desired by the Fed will occur D) very effective; banks will predictably increase borrowings from the Federal Reserve when the discount rate decreases and decrease borrowings when the discount rate increases
During the Great Depression, unemployment peaked at
A) 10%. B) between 15 and 20%. C) over 20%. D) 81%.
Assume that autonomous expenditures in an economy decreased by $10 billion. What is the change in aggregate demand at a given price level if the MPC is 0.5?
a. increase by $50 billion b. increase by $10 billion c. decrease by $20 billion d. decrease by $10 billion