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29. When stock prices become more volatile, the ______ curve for bonds shifts to the _____.

a.  demand; right

b.  demand; left

c.  supply; left

d.  supply; right

30. When the federal government's budget deficit increases, the _____ curve for bonds shifts to the _____.

a.  demand; right

b.  demand; left

c.  supply; left

d.  supply; right

31. When the expected inflation rate increases, the demand for bonds _____, the supply of bonds _____, and the interest rate ______.

a.  increases; increases; rises

b.  decreases; decreases; falls

c.  increases; decreases; falls

d.  decreases; increases; rises

32. When people begin to expect a run up in large stock market, the demand curve for bonds shifts to the _____ and the interest rate _____.

a.  right; rises

b.  right; falls

c.  left; falls

d.  left; rises

33. The theory of asset demand provides a framework for deciding what factors cause the demand curve for bonds shift.  These factors include changes in the

a.  wealth of investors.

b.  liquidity of bonds relative to alternative assets.

c.  expected returns on bonds relative to alternative assets.

d.  risk of bonds relative to alternative assets.

e.  all of the above.

34. Factors that cause the demand curve for bonds to shift to the right include

a.  a decrease in the inflation rate.

b.  an increase in the volatility of stock prices.

c.  an increase in the liquidity of stocks.

d.  all of the above.

e.  only (a) and (b) of the above.  

35. Factors that can cause the supply curve for bonds to shift to the right include

a.  an expansion in overall economic activity.

b.  an increase in expected inflation.

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