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If the Interest Rate on a Bond Is Above the Equilibrium

question 68

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If the interest rate on a bond is above the equilibrium interest rate,there is an excess ________ for bonds and the bond price will ________.


Definitions:

Willingness to Pay

The maximum amount a buyer is prepared to spend on a good or service, reflecting the value they derive from it.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Graphing Calculator

A handheld device capable of plotting graphs, solving simultaneous equations, and performing other tasks with variables.

Consumer Surplus

The deviation between consumers’ anticipated payment for a product or service and the eventual price paid.

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