Chapter 3
What is Money?
provides
1. (b)remedy什么意思
3. Cavemen did not need money. In their primitive economy, they did not specialize in producing one type of good and they had little need to trade with other cavemen.
5. Wine is more difficult to transport than gold and is also more perishable. Gold is thus a better store of value than wine and also leads to lower transactions cost. It is therefore a better candidate for u as money.
fightagainst7. Not necessarily. Checks have the advantage in that they provide you with receipts, are easier to keep track of, and may make it harder for someone to steal money out of your account. The advantages of checks may explain why the movement toward a checkless society has been very gradual.
8. The ranking from most liquid to least liquid is: (a), (c), (e), (f), (b), and (d).
10. Becau of the rapid inflation in Brazil, the domestic currency, the real, is a poor store of value. Thus many people would rather hold dollars, which are a better store of value, and u them in their daily shopping.
14. (a) M1, M2, and M3, (b) M2 and M3 for retail MMFs and M3 for institutional MMFs, (c) M3, (d) M2 and M3, (e) M3, (f) M1, M2, and M3.
星期一到星期天的英文
Chapter 4
Understanding Interest Rates
2. No, becau the prent discounted value of the payments is necessarily less than $20 million as long as the interest rate is greater than zero.
4. The yield to maturity is less than 10 percent. Only if the interest rate was less than 10 percent would the prent value of the payments add up to $4,000, which is more than the $3,000 prent value in the previous problem.
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6. 25% = ($1,000 – $800)/$800 = $200/$800 = .25.
8. If the interest rate were 12 percent, the prent discounted value of the payments on the government loan are necessarily less than the $1,000 loan amount becau they do not start for two years. Thus the yield to maturity must be lower than 12 percent in order for the prent discounted value of the payments to add up to $1,000.
10. The current yield will be a good approximation to the yield to maturity whenever the bond price is very clo to par or when the maturity of the bond is over ten years.
12. the carpenters You would rather be holding longterm bonds becau their price would increa more than the price of the shortterm bonds, giving them a higher return.
14. People are more likely to buy hous becau the real interest rate when purchasing a hou has fallen from 3 percent (= 5 percent - 2 percent) to 1 percent (= 10 percent - 9 percent). The real cost of financing the hou is thus lower, even though mortgage rates have rin. (If the tax deductibility of interest payments is allowed for, then it becomes even more likely that people will buy hous.)followyourheart
Chapter 5
The Behavior of Interest Rates
1. (a) Less, becau your wealth has declined; (b) more, becau its relative expected return has rin; (c) less, becau it has become less liquid relative to bonds; (d) less, becau its expected return has fallen relative to gold; (e) more, becau it has become less risky relative to bonds.
3. (a) More, becau it has become more liquid; (b) less, becau it has become more risky; (c) more, becau its expected return has rin; (d) more, becau its expected return has rin relative to the expected return on longterm bonds, which has declined.
5. The ri in the value of stocks would increa people’s wealth and therefore the demand for Rembrandts would ri.
7. In the loanable funds framework, when the economy booms, the demand for bonds i
ncreas: the public’s income and wealth ris while the supply of bonds also increas, becau firms have more attractive investment opportunities. Both the supply and demand curves (Bd and Bs) shift to the right, but as is indicated in the text, the demand curve probably shifts less than the supply curve so the equilibrium interest rate ris. Similarly, when the economy enters a recession, both the supply and demand curves shift to the left, but the demand curve shifts less than the supply curve so that the interest rate falls. The conclusion is that interest rates ri during booms and fall during recessions: that is, interest rates are procyclical. The same answer is found with the liquidity preference framework. When the economy booms, the demand for money increas: people need more money to carry out an incread amount of transactions and also becau their wealth has rin. The demand curve, Md, thus shifts to the right, raising the equilibrium interest rate. When the economy enters a recession, the demand for money falls and the demand curve shifts to the left, lowering the equilibrium interest rate. Again, interest rates are en to be procyclical.
www listeningexpress com10. Interest rates fall. The incread volatility of gold prices makes bonds relatively less risky relative to gold and caus the demand for bonds to increa. The demand curve, Bd, shifts to the right and the equilibrium interest rate falls.
12. Interest rates might ri. The large federal deficits require the Treasury to issue more bonds; thus the supply of bonds increas. The supply curve, Bs, shifts to the right and the equilibrium interest rate ris. Some economists believe that when the Treasury issues more bonds, the demand for bonds increas becau the issue of bonds increas the public’s wealth. In this ca, the demand curve, B头朝下的生活d, also shifts to the right, and it is no longer clear that the equilibrium interest rate will ri. Thus there is some ambiguity in the answer to this question.
