During an economic recession, A. the bond demand and supply curves both shift to the left and the equilibrium interest rate usually falls. B. the bond demand curve shifts to the left, the bond supply curve shifts to the right, and the equilibrium interest rate usually rises. C. the bond demand curve shifts to the right, the bond supply curve shifts to the left, and the equilibrium interest rate usually falls. D. the bond demand and supply curves both shift to the right and the equilibrium interest rate usually rises.

Question

Business

Kendall

8 June, 09:14

During an economic recession, A. the bond demand and supply curves both shift to the left and the equilibrium interest rate usually falls. B. the bond demand curve shifts to the left, the bond supply curve shifts to the right, and the equilibrium interest rate usually rises. C. the bond demand curve shifts to the right, the bond supply curve shifts to the left, and the equilibrium interest rate usually falls. D. the bond demand and supply curves both shift to the right and the equilibrium interest rate usually rises.

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Answers (1)

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Daisy Buckley · Answer 1

B. the bond demand curve shifts to the left, the bond supply curve shifts to the right, and the equilibrium interest rate usually rises.

Explanation:

In this case:

The supply increases, curve shifts to the right. The demand increases, curve shifts to the left Both the above shifts cause the price of bonds to decrease The above changes cause interest rate to increase

In this way, the quantity of bonds increase