Question 18.18. Financial intermediaries (Points : 2)

exist because there are substantial information and transactions costs in the economy improve the lot of small savers are involved in the process of indirect finance do all of the above do (a) and (c) but not (b)

Question 19.19. In a business cycle recession, when there are far fewer expected profitable investment opportunities, the supply of bonds ______, and the bond supply curve shifts to the _________. (Points : 2)

rises, right rises, left falls, right falls, left

Question 20.20. In a business cycle expansion with growing wealth, the demand for bonds ________ and the demand curve for bonds shifts to the _________. (Points : 2)

rises, right rises, left decreases, right decreases, left

Question 21.21. Higher government deficits ________ the supply of bonds and shift the supply curve to the ______, tending to _______ interest rates. (Points : 2)

increase, right, raise decrease, left, lower increase, right, lower decrease, left, lower none of these-it does not affect the bond supply curve

Question 22.22. An increase in the expected rate of inflation will ___________ the expected return on bonds relative to that on __________ assets; and shift the _____________ curve to the left. (Points : 2)

reduce; financial; demand reduce; real; demand raise; financial; supply raise; real; supply

Question 23.23. When bond interest rates become more volatile, the demand for bonds ___________ and interest rates ____________. (Points : 2)

increases; rise increases; fall decreases; fall decreases; rise none of the above-that does not affect the demand for bonds

Question 24.24. Factors that can cause the supply curve for bonds to shift to the right include: (Points : 2)

an expansion in overall economic activity a decrease in expected inflation a decrease in government deficits all of the above only (a) and (b) but not (c)

Question 25.25. When stock prices become less volatile, the demand curve for bonds shifts to the __________ and interest rates _____________. (Points : 2)

right; rise right; fall left; fall left; rise none of the above-that does not affect the demand for bonds