Based on Our Understanding of the Determinants of the Interest

question 60

Multiple Choice

Based on our understanding of the determinants of the interest rate and bond prices, we know that a decrease in income will cause:

• A) A decrease in bond prices and an increase in i.
• B) An increase in bond prices and an increase in the interest rate (i).
• C) No change in bond prices and a decrease in i.
• D) An increase in bond prices and a decrease in i.
• E) A decrease in bond prices and a decrease in i.

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