If the Expected Gains on Stocks Rise, While the Expected

question 51

Multiple Choice

If the expected gains on stocks rise, while the expected returns on bonds do not change, then

• A)the demand curve for bonds will shift to the right.
• B)the supply curve for loanable funds will shift to the right.
• C)the equilibrium interest rate will fall.
• D)the equilibrium interest rate will rise.

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Definitions:

Market Price

The price at which goods and services are currently being sold in the market, influenced by supply and demand.

Equilibrium Price

The price point in the market at which the amount of goods being offered is equal to the amount of goods being sought.

Quantity Supplied

The volume of a commodity or service that sellers are ready and capable of providing at a specific price within a given period.

Surplus

An excess of production or supply over demand, often resulting in lower prices.