Please provide the answer for the following multiple choice questions: 11) In th

Question

Please provide the answer for the following multiple choice questions:

11) In the liquidity preference framework, a one-time increase in the money supply re- sults in a price level effect. The maximum impact of the price level effect on interest rates occurs: A) at the moment the price level hits its peak (stops rising) because both the price level and expected inflation effects are at work. B) immediately after the price level begins to rise, because both the price level and ex pected inflation effects are at work. C) at the moment the expected inflation rate hits its peak. D) at the moment the inflation rate hits it peak. 12) In the figure below: Interest Rate M1 Quantity of Money, M the decrease in the interest rate from i1 to i2 can be explained by: A) a decrease in money growth B) a decline in the expected price level C) an increase in income D) an increase in the expected price level 13) If the possibility of a default increases because corporations begin to suffer losses, then the default risk on corporate bonds will come crease, everything else held constant A) increase; less B) increase; more C) decrease; less D) decrease; more and the bonds' returns will be- uncertain, meaning that the expected return on these bonds will de-

Explanation / Answer

11.
at the moment the price level hits its peak (stops rising) because both the price level and expected inflation effects are at work.
12.
a decline in the expected price level
13.
increase, more
14.
average
15.
segmented markets theory

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