Higher expected interest rates in the future ________ the demand for long-term bonds and shift the demand curve to the ________.
A) increase; left
B) increase; right
C) decrease; left
D) decrease; right

Question

Quizplus · Accepted Answer

Higher expected interest rates in the future make long-term bonds less attractive compared to short-term bonds, reducing the demand for long-term bonds. Therefore, the demand for long-term bonds decreases, shifting the demand curve to the left.

Higher Expected Interest Rates in the Future ________ the Demand