The Impact of a Decrease in Expected Inflation in the Bond

question 87

Multiple Choice

The impact of a decrease in expected inflation in the bond market will have a relatively large effect on the prices of bonds prices because the bond demand curve:

• A) will shift right as will the bond supply curve.
• B) will shift right but the bond supply curve shifts left.
• C) and supply curves will shift left.
• D) will shift left as the bond supply curve shifts right.

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