The demand curve for bonds would be shifted to the left by
A)an increase in expected returns on other assets.
B)a decrease in the information costs of bonds relative to other assets.
C)a decrease in expected inflation.
D)an increase in the liquidity of bonds relative to other assets.

Question

Quizplus · Accepted Answer

An increase in expected returns on other assets would make those assets more attractive to investors, causing them to shift their investment away from bonds and towards those other assets. This would result in a decrease in demand for bonds, and a leftward shift in the demand curve.

The Demand Curve for Bonds Would Be Shifted to the Left