All Else Constant, an Increase in the Demand for Bonds

question 127

Multiple Choice

All else constant, an increase in the demand for bonds

• A) increases the equilibrium quantity and the equilibrium price of bonds.
• B) increases the equilibrium quantity and decreases the equilibrium price of bonds.
• C) decreases the equilibrium quantity and increases the equilibrium price of bonds.
• D) decreases the equilibrium quantity and the equilibrium price of bonds.

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Definitions:

Discount Rate

The interest rate on the loans that the Fed makes to banks.

Re-Elected

The act of being elected again for the same position or office after completing a term.

Short-Run Phillips Curve

An economic model suggesting an inverse relationship between the rate of inflation and the unemployment rate in the short term.

Sacrifice Ratio

The measure of the decline in a country's economic output as a result of efforts to reduce inflation.