Davidson; Management - 3rd Australasian Edition



1.
The real rate of interest can be viewed as the time value of not consuming.
A. True
B. False


2.
The current rate of inflation affects the expected level of interest rates.
A. True
B. False


3.
The market rate of interest can be viewed as the real rate of interest plus a premium for the expected rate of inflation.
A. True
B. False


4.
Declining interest rates can be caused by an upward shift in the demand for loanable funds relative to the supply of loanable funds.
A. True
B. False


5.
The expected real rate of interest is likely to be negative.
A. True
B. False


6.
An increase in desired investment shifts the desired savings supply line upward to higher real rates of interest.
A. True
B. False


7.
Nominal interest rates reflect anticipated inflation.
A. True
B. False


8.
Expected increased inflation usually drives up bond prices.
A. True
B. False


9.
Interest rates are directly related to inflation expectations and inversely related to the level of economic activity.
A. True
B. False


10.
An upward shift in the supply of loanable funds is likely to increase interest rates.
A. True
B. False


11.
An increase in rates of return on real capital investment will increase real interest rates.
A. True
B. False


12.
An increase in the desired saving rate will increase real interest rates.
A. True
B. False


13.
Deficit spending units supply loanable funds.
A. True
B. False


14.
The Fisher Effect holds that nominal interest rates include an expected inflation rate.
A. True
B. False


15.
Nominal rates generally exceed the real rate.
A. True
B. False


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