If stock prices are expected to climb next year,everything else held constant,the ________ curve for bonds shifts ________ and the interest rate ________.
A)demand;left;rises
B)demand;right;rises
C)demand;left;falls
D)supply;left;rises

Question

Quizplus · Accepted Answer

When stock prices are expected to climb, investors are likely to shift their investments from bonds to stocks. This decreases the demand for bonds, shifting the demand curve to the left. With lower demand for bonds, the price of bonds falls, leading to higher interest rates (since bond prices and interest rates move in opposite directions).

If Stock Prices Are Expected to Climb Next Year,everything Else