Suppose Expected Inflation Is Fixed at Zero and We Are

question 47

Multiple Choice

Suppose expected inflation is fixed at zero and we are on the SP curve with p = 2 and Y = 104.If nominal GDP rises (again) by 6 percent

• A)the SP curve must now shift up.
• B)we must move off the SP curve to where p = 6 and Y = 104.
• C)we must slide northeast further up the SP curve.
• D)we must move off the SP curve to where p = 2 and Y = 110.

Understand the determination of bond prices and their relation to yield to maturity.

Analyze the effect of coupons and maturity on bond pricing and yield.

Identify characteristics and valuation of different types of bonds: coupon, zero-coupon, callable, and convertible bonds.

Calculate the yield to maturity for various bonds.

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