-传统
CHAPTER 3
What is Money?
1.
3.
(b)
Cavemen
did
not
need
money.
In
their
primitive
economy,
they
did
not
specialize
in
producing one type of good and they had
little need to trade with other cavemen.
Wine is more difficult to transport
than gold and is also more perishable. Gold is
thus a better
store
of
value
than
wine
and
also
leads
to
lower
transactions
cost.
It
is
therefore
a
better
candidate for use as money.
5.
7
.
Not
necessarily.
Checks
have
the
advantage
in
that
they
provide
you
with
receipts, are easier to
keep track of, and may make it harder for someone
to
steal
money
out
of
your
account.
These
advantages
of
checks
may
explain
why the movement
toward a checkless society has been very gradual.
The ranking from most liquid to least
liquid is: (a), (c), (e), (f), (b), and (d).
8.
10.
Because of
the rapid inflation in Brazil, the domestic
currency, the real, is a
poor store of
value. Thus many people would rather hold dollars,
which are a
better store of value, and
use them in their daily shopping.
(a)
M1, M2, and M3, (b) M2 and M3 for retail MMFs and
M3 for institutional MMFs, (c) M3,
(d)
M2 and M3, (e) M3, (f) M1, M2, and M3.
14.
CHAPTER 4
Understanding Interest Rates
2.
4.
No, because the present
discounted value of these payments is necessarily
less
than $$20 million as long as the
interest rate is greater than zero.
The
yield to maturity is less than 10 percent. Only if
the interest rate was less
than
10
percent
would
the
present
value
of
the
payments
add
up
to
$$4,000,
which is more than
the $$3,000 present value in the previous problem.
25%
?
($$1,000
–
$$800)/$$800
?
$$200/$$800
?
.25.
If
the
interest
rate
were
12
percent,
the
present
discounted
value
of
the
payments
on
the
government
loan are necessarily less than the $$1,000 loan
amount because they do not start for
two years. Thus the yield to maturity
must be lower than 12 percent in order for the
present
discounted value of these
payments to add up to $$1,000.
The
current
yield
will be
a
good
approximation
to
the
yield
to
maturity
whenever
the
bond
price is
very close to par or when the maturity of the bond
is over ten years.
6.
8.
10.
12.
You
would
rather
be
holding
long-
term
bonds
because
their
price
would
increase
more
than
the
price
of
the
short-term
bonds,
giving
them
a
higher
return.
People
are
more
likely
to
buy
houses
because
the
real
interest
rate
when
purchasing a house has
fallen from
3 percent
(
?
5
percent
?
2 percent)
to
1
percent
(
?
10 percent
?
9 percent). The real cost
of financing the house is thus
lower,
even
though
mortgage
rates
have
risen.
(If
the
tax
deductibility
of
interest payments is allowed for, then
it becomes even more likely that people
will buy houses.)
14.
CHAPTER 5
The Behavior of
Interest Rates
1.
(a) Less, because your wealth has
declined; (b) more, because its relative expected
return has
risen;
(c)
less,
because
it
has
become
less
liquid
relative
to
bonds;
(d)
less,
because
its
expected return has fallen relative to
gold; (e) more, because it has become less risky
relative
to bonds.
(a) More,
because it has become more liquid; (b) less,
because it has become more risky; (c)
more,
because
its
expected
return
has
risen;
(d)
more,
because
its
expected
return
has
risen
relative to the expected return on
long-term bonds, which has declined.
The rise in the
value of
stocks would increase people’s wealth and
therefore the demand for
Rembrandts
would rise.
3.
5.
7.
In the loanable funds framework, when
the economy booms, the demand for
bonds
increases:
the
public’s
income
and
wealth
rises
while
the
supply
of
bonds
also
increases,
because
firms
have
more
attractive
investment
opportunities. Both the supply and
demand curves (B
d
and
B
s
) shift to the right,
but as is indicated in the text, the
demand curve probably shifts less than the
supply
curve
so
the
equilibrium
interest
rate
rises.
Similarly,
when
the
economy
enters a recession,
both
the
supply
and demand
curves
shift
to
the
left, but the demand curve shifts less
than the supply curve so that the interest
rate
falls.
The
conclusion
is
that
interest
rates
rise
during
booms
and
fall
during
recessions:
that
is,
interest
rates
are
procyclical.
The
same
answer
is
found with the liquidity preference
framework. When the economy booms, the
demand
for
money
increases:
people
need
more
money
to
carry
out
an
increased amount of
transactions and also because their wealth has
risen. The
demand curve,
M
d
, thus shifts to the
right, raising the equilibrium interest rate.
When
the
economy
enters
a
recession,
the
demand
for
money
falls
and
the
demand curve shifts to the left,
lowering the equilibrium interest rate. Again,
interest rates are seen to be
procyclical.
Interest
rates
fall.
The
increased
volatility
of
gold
prices
makes
bonds
relatively
less
risky
relative to gold and
causes the demand for bonds to increase. The
demand curve, B
d
, shifts to
the right and the equilibrium interest
rate falls.
Interest rates might rise.
The large federal deficits require the Treasury to
issue more bonds;
thus
the
supply
of
bonds
increases.
The
supply
curve,
B
s
,
shifts
to
the
right
and
the
equilibrium interest rate rises. Some
economists believe that when the Treasury issues
more
bonds,
the
demand
for
bonds
increases
because
the
issue
of
bonds
increases
the
public’s
wealth. In this case, the demand curve,
B
d
, also shifts to the
right, and it is no longer clear that
the
equilibrium
interest
rate
will
rise.
Thus
there
is
some
ambiguity
in
the
answer
to
this
question.
The price level
effect has its maximum impact by the end of the
first year, and since the price
level
does not fall further, interest rates will not
fall further as a result of a price level effect.
On the other hand, expected inflation
returns to zero in the second year, so that the
expected
inflation effect returns to
zero. One factor producing lower interest rates
thus disappears, so, in
the second
year, interest rates may rise somewhat from their
low point at the end of the second
year.
10.
12.
14.
16.
If the public believes the president’s
program will be successful, interest rates
will fall. The president’s announcement
will lower
expected inflation so that
the
expected
return
on
goods
decreases
relative
to
bonds.
The
demand
for
bonds
increases
and
the
demand
curve,
B
d
,
shifts
to
the
right.
For
a
given
nominal interest rate,
the lower expected inflation means that the real
interest
rate has risen, raising the
cost of borrowing so that the supply of bonds
falls.
The resulting leftward shift of
the supply curve, B
s
, and
the rightward shift of
the demand
curve, B
d
, causes the
equilibrium interest rate to fall.
18.
Interest
rates
will
rise.
The
expected
increase
in
stock
prices
raises
the
expected
return
on
stocks relative to bonds
and so the demand for bonds falls. The demand
curve, B
d
, shifts to the
left and the equilibrium interest rate
rises.
The
slower
rate
of
money
growth
will
lead
to
a
liquidity
effect,
which
raises
interest
rates,
while the lower price
level, income, and inflation rates in the future
will tend to lower interest
rates.
There
are
three
possible
scenarios
for
what
will
happen:
(a)
if
the
liquidity
effect
is
larger
than the other effects, then interest rates will
rise; (b) if the liquidity effect is smaller
than the other effects and expected
inflation adjusts slowly, then interest rates will
rise at first
but will eventually fall
below their initial level; and (c) if the
liquidity effect is smaller than
the
expected inflation effect and there is rapid
adjustment of expected inflation, then interest
rates will immediately fall.
20.