1. There is a decline in returns on financial investments other than bonds. Other things being equal, this will cause:
a. a movement down along the bond demand curve.
d. the supply curve of bonds to shift to the left.
c. the demand curve for bonds to shift to the left.
d. bond prices to rise.
2. The most important consideration during a bank run is:
a. the composition of bank assets.
b. bank liquidity.
c. bank solvency.
d. bank loans outstanding.
3. Other things being equal, an increase in the expected inflation rate:
a. lowers the real cost of borrowing and the demand for loans increases.
b. increases the real interest rate.
c. raises the real cost of borrowing and the demand for loans decreases.
d. shifts the bond supply curve to the left.