If Interest Rates Are Expected to Fall, Bond Prices Will

question 98

Multiple Choice

If interest rates are expected to fall, bond prices will:

• A) fall as the demand for bonds decreases.
• B) remain constant until interest rates actually change.
• C) fall as people fear capital losses in the future.
• D) increase due to the demand for bonds increasing.

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Definitions:

Per Capita Incomes

Refers to the average income earned per person in a given area (e.g., city, region, country) in a specified year.

Absolute Income Gap

The difference in total income or earnings between individuals, households, or countries, measured without adjusting for living costs or other factors.

Real Income Per Capita

The average income per person in a country, adjusted for inflation, which reflects the purchasing power and economic well-being of the population.

Growth Rate

The percentage change of a specific variable within a specified time period, often used to describe the increase in population, revenue, or other significant measures.