The bond demand curve slopes down because
A)interest rates decline as bond prices decline.
B)when bond prices are low, inflation is low.
C)the lender is willing and able to purchase more bonds when the price of the bond is low.
D)the borrower is willing and able to purchase more bonds when the price of the bond is low.

Question

Quizplus · Accepted Answer

The bond demand curve slopes down because the lender is willing and able to purchase more bonds when the price of the bond is low. As the price of bonds decreases, their yield increases, making them more attractive to investors seeking fixed income. Therefore, when bond prices decrease, demand for them increases, leading to a downward-sloping demand curve. Options A, B, and D are incorrect because they do not accurately describe the relationship between bond prices and demand.

The Bond Demand Curve Slopes Down Because