We Would Expect Which of the Following to Occur When

question 36

Multiple Choice

We would expect which of the following to occur when the central bank pursues contractionary monetary policy?

• A)an increase in bond prices and an increase in the interest rate (i)
• B)a reduction in bond prices and an increase in i
• C)an increase in bond prices and a reduction in i
• D)a reduction in bond prices and a reduction in i
• E) none of the above

Calculate the necessary rate of return to achieve a specific financial goal.

Understand the concept of nominal interest rate and how to calculate it.

Recognize the effects of government fiscal policies on financial markets.

Compute the term of investment or loan based on given financial variables.

---

Definitions:

Underwriting Securities

The process through which investment banks issue new securities to the market, assuming the risk of selling them at a certain price.

Accepting Deposits

A banking activity that involves receiving money from customers for safekeeping or for earning interest, typically in savings or checking accounts.

Systematically Important

Refers to entities or institutions whose failure could trigger a financial crisis, necessitating regulatory oversight to ensure stability.

Economic Growth

An increase in a country's capacity to produce goods and services, compared from one period of time to another.