In the figure above, a factor that could cause the demand for bonds to decrease (shift to the left)is ________.
A)an increase in the expected return on bonds relative to other assets
B)a decrease in the expected return on bonds relative to other assets
C)an increase in wealth
D)a reduction in the riskiness of bonds relative to other assets

Question

In the figure above, a factor that could cause the demand for bonds to decrease (shift to the left)is ________.
A)an increase in the expected return on bonds relative to other assets 
B)a decrease in the expected return on bonds relative to other assets 
C)an increase in wealth 
D)a reduction in the riskiness of bonds relative to other assets

Quizplus · Accepted Answer

According to the law of demand, a decrease in the expected return on bonds relative to other assets would result in a decrease in the demand for bonds as investors would prefer other assets with higher returns. This would cause a leftward shift of the demand curve for bonds.

In the Figure Above, a Factor That Could Cause the Demand