When the interest rate on a bond is ________ the equilibrium interest rate,in the bond market there is excess ________ and the interest rate will ________.
A)above;demand;rise
B)above;demand;fall
C)below;supply;fall
D)above;supply;rise

Question

Quizplus · Accepted Answer

When the interest rate on a bond is above the equilibrium interest rate, there is excess supply of bonds (more people want to sell bonds than buy them at that high interest rate), leading to a decrease in the interest rate to reach equilibrium.

When the Interest Rate on a Bond Is ________ the Equilibrium