When the Interest Rate on a Bond Is Below the Equilibrium

question 104

Multiple Choice

When the interest rate on a bond is below the equilibrium interest rate,there is excess ________ in the bond market and the interest rate will ________.

• A) demand; rise
• B) demand; fall
• C) supply; fall
• D) supply; rise

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Definitions:

Strategic

refers to the careful planning and management of resources to achieve a specific goal or to gain an advantage.

Fluid Intelligence

The capacity to reason quickly and think abstractly, enabling problem solving and learning in novel situations.

Selective Optimization With Compensation

The theory, developed by Paul and Margaret Baltes, that people try to maintain a balance in their lives by looking for the best way to compensate for physical and cognitive losses, and to become more proficient in activities they can already do well.

Practical Intelligence

The skill of overcoming routine problems by leveraging insights obtained from previous experiences rather than from theoretical or academic learning.