The Impact of a Decrease in Expected Inflation in the Bond

question 25

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:

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

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Definitions:

Voucher System

A control process in accounting where vouchers are used to authorize and record transactions before payments are made.

Internal Control

Processes and procedures implemented by a company to safeguard assets, enhance the reliability of financial reports, and ensure compliance with laws and regulations.

Information

Data that is processed, organized, structured, or presented in a given context to make it meaningful and useful.

Voucher

A written document that serves as evidence of a transaction and authorizes payment.