The interest rate falls when either the demand for bonds ________ or the supply of bonds ________.
A)increases;increases
B)increases;decreases
C)decreases;decreases
D)decreases;increases

Question

Quizplus · Accepted Answer

The interest rate falls when the demand for bonds increases (more people want to buy them, so their price goes up and the interest rate, which moves inversely to bond prices, goes down) or the supply of bonds decreases (fewer bonds are available, so their price goes up for the same reason, leading to a decrease in interest rates).

The Interest Rate Falls When Either the Demand for Bonds