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(Figure: Expectations 0) in the Figure, What Is the Cause

question 19

Multiple Choice

(Figure: Expectations 0) In the figure, what is the cause of the movement from point a to b?
(Figure: Expectations 0)  In the figure, what is the cause of the movement from point a to b?    A)  positive demand shock B)  negative demand shock C)  self-correcting mechanism D)  inflation expectations

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Definitions:

Yield %

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or value.

Default Risk Premium

The additional yield that investors require to invest in bonds that have a risk of default, compared to risk-free bonds.

Liquidity Risk Premium

The extra yield or return that investors demand for holding a security that may not be easily sold or converted into cash without a significant loss in value.

Maturity Risk Premium

The additional yield demanded by investors as compensation for the increased risk of holding a bond as it approaches its maturity date.

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