How is the interest rate that prevails in the bond market determined?
A) by the interaction of stock prices and bond prices
B) by the decision of the president, in consultation with Congress
C) by the demand for and supply of bonds
D) by the Board of Governors of the New York Stock Exchange
C
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If there is no Ricardo-Barro effect, a government budget surplus
A) increases the demand for loanable funds. B) increases the supply of loanable funds. C) decreases the supply of loanable funds. D) decreases the demand loanable funds. E) has no effect on the demand for loanable funds, the supply of loanable funds, or the real interest rate.
A market consequence of the establishment of a price floor program is that price will be:
a. too low, and an excess supply will result. b. too low, and a shortage will result. c. too high, and an excess supply will result. d. too high, and a shortage will result. e. below the market equilibrium price.
Suppose the consumer price index (CPI) stands at 250 this year. If the inflation rate is 10 percent, then next year's CPI will equal:
a. 250. b. 260. c. 275. d. 500.
Suppose that milk producers expect that the price of milk is going to drop next week. This would cause
A) a decrease in the supply of milk today. B) an increase in the supply of milk today. C) an increase in the demand for milk today. D) the selling price of milk to rise today.