Question Details

What price should one expect to pay 



1. Suppose the current interest rate is 5%. What price should one expect to pay for a $1000 treasury bill, due to mature in one year, Which had originally been sold when the interest rate was 10%? 
a) less than $950 b) $950 c) between $950 and $1000 d) more than $1000 
2. Consider a bond with a coupon of $90, and a face value of $1,000, due to mature in one year's time. The current interest rate is 10%. The current price of this bond is 
a) less than $990 b) $990 c) between $990 and $1000 d) more than $1000 
3. Consider a bond with a coupon of $90, and a face value of $1,000, due to mature in one year's time. The current interest rate is 5%. The current price of this bond is 
a) less than $990 b) $990 c) between $990 and $1000 d) more than $1000 
4. Consider a bond with a coupon of $80, and a face value of $1,000, due to mature in one year's time. The current interest rate is 10%. The current price of this bond is 
a) less than $990 b) $990 c) between $990 and $1000 d) more than $1000 
5. Suppose the impact on the interest rate of a $3 increase in government spending can be eliminated by a $1 increase in the money supply. If "the" multiplier is 4 and the income multiplier with respect to the money supply is 3, what mix of monetary and fiscal policy is required to increase income by $6000 without changing the interest rate? 
a) increase G by 900 and increase M by 800 
b) increase G by 1500 and increase M by 500 
c) increase G by 1200 and increase M by 400 
d) increase G by 3000 and decrease M by 2000



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