Chapter 2

Do You Understand ?
1.Household
2.Businesses
3.Increase
4.Decrease
5.Equilibrium interest rate in FMs as a result of sul! and demand for loanable funds
".#ominal interest rate $ inflation % real interest rate
&.Increase
'.( comarison of mar)et !ields
*.
+,-ard sloin. / Future interest rate -ill rise
+Do-n-ard sloin./ Future interest rate -ill fall
+ Flat/ Future interest rate -ill be flat
10. (n e1ected rate on a securit! that ori.inates at some oint in the future.
11. Forcastin.