ECO4223 EXAM 2 2025 BRAND NEW ACTUAL EXAM WITH ANSWERS.

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ECO4223 EXAM 2 2025 BRAND NEW
ACTUAL EXAM WITH ANSWERS.

Supply for Bonds and Changes in Supply - correct answer -
Borrowers and Spenders


Changes:
1. Wealth
2. Real Interest Rate Decreases
3. Government Deficit Spending




Liquidity Preference Framework - correct answer -Determines
Equilibrium Interest Rate




Expectations Theory - correct answer -Long Term Bonds are an
average of Short Term bonds


interest rates are expected to gravitate toward the center

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Segmented Markets Theory - correct answer -Interest rates are
determined independently through the supply and demand of
different maturity bonds. No longer perfect substitutes for
eachother.




Liquidity Premium Theory - correct answer -Long Term interest
rates are an average of short term rates plus a liquidity premium .
The extra incentive a saver required to hold the longer term bond.




How can a yield curve be inverted? - correct answer -Short term
interest rates expected to decline.




Simple Deposit Multiplier - correct answer -1/RR




Currency Ratio - correct answer -c = Currency/Deposits




Excess Reserve Ratio - correct answer -e = Excess
Reserves/Deposits