Chapter 11

Question 1

What are financial instruments?

Answer 1

agreements between parties concerning rights to pmts of money

Question 2

What is a mutual fund?

Answer 2

Pooled savings of many investors is used to buy stocks, bonds, or other assets

Question 3

What is a CDO?

Answer 3

Collateralized debt obligation

Question 4

What happens to bond demand when prices go up?

Answer 4

Bond demand shifts right

Question 5

What happens to aggregate demand when real GDP and price rise

Answer 5

Aggregate Demand shifts right

Question 6

What happens to supply when bond prices fall?

Answer 6

Supply shifts right

Question 7

What happens to Aggregate demand when real GDP and price fall?

Answer 7

bond aggregate demand shift left

Question 8

What are transactions demand for money?

Answer 8

money people hold to for goods and srvcs they anticipate buying

Question 9

What is precautionary demand for money?

Answer 9

money people hold for contingencies

Question 10

What is speculative demand for money?

Answer 10

money held in response to concern that bond prices and the prices of other financial assets might change

Question 11

WHat 5 things will shift the money demand curve?

Answer 11

real GDP, price lvl, expectations, transfer costs, preferences