When the Interest Rate on a Bond Is ________ the Equilibrium

question 85

Multiple Choice

When the interest rate on a bond is ________ the equilibrium interest rate,there is excess ________ in the bond market and the interest rate will ________.

• A) above; demand; fall
• B) above; demand; rise
• C) below; supply; fall
• D) above; supply; rise

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Definitions:

Chilling Effect

A situation where the threat of legal action or other potential repercussions suppresses lawful speech or actions.

Binding Arbitration

A type of arbitration where the decision made by the arbitrator is legally enforceable and cannot be appealed.

Decision-acceptance Effect

The impact that the acceptance of a decision has on individuals or groups, influencing their behaviors and perceptions.

Arbitrated Disputes

Conflicts resolved by a third party, whose decision is usually binding.