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

If the expected return on bonds decreases relative to other assets, such as stocks or real estate, individuals and investors may choose to invest in those other assets instead, thereby decreasing demand for bonds and shifting the demand curve to the left.

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