Everything else held constant,if interest rates are expected to fall in the future,the demand for long-term bonds today ________ and the demand curve shifts to the ________.
A)rises;right
B)rises;left
C)falls;right
D)falls;left

Question

Quizplus · Accepted Answer

When interest rates are expected to fall in the future, investors anticipate that new bonds will offer lower yields. Therefore, they prefer to buy long-term bonds now, while they still offer higher yields, leading to an increase in demand for long-term bonds today. This increased demand shifts the demand curve to the right.

Everything Else Held Constant,if Interest Rates Are Expected to Fall