When the Corporate Bond Market Becomes More Liquid,other Things Equal,the

question 44

Multiple Choice

When the corporate bond market becomes more liquid,other things equal,the demand curve for corporate bonds shifts to the ________ and the demand curve for Treasury bonds shifts to the ________.

• A) right; right
• B) right; left
• C) left; left
• D) left; right

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Definitions:

Consumer Surplus

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

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual price they receive.

Below Equilibrium Price

A situation where the price of a good or service is set lower than the market equilibrium, often leading to a shortage.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient, often due to externalities, monopolies, or information asymmetries.