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Chapter 27: Money, Interest Rates, and Economic Activity - Coggle Diagram
Chapter 27: Money, Interest Rates, and Economic Activity
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Interest rates
an increase in the market interest rate leads to a fall in the price of any given bond. A decrease in the market interest rate leads to an increase in the price of any given bond
Bond prices
an increase in the riskiness of any bond leads to a decline in its expected present value and thus to a decline in the bond's price. The lower bond price implies a higher bond yield
Bond yields
The yield on any specific bond is a function of that bond's sequence of payments and its purchase price.
an increase in the market interest rate will reduce bond prices and increase bond yields
bond yields and interest rates are positively related
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Hysteresis
the possibility that short-run changes in real GDP caused by changes in the money supply may have an influence on Y*
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