When people begin to expect a large stock market decline,the demand curve for bonds shifts to the ________ and the interest rate ________.
A) right; falls
B) right; rises
C) left; falls
D) left; rises

Question

Quizplus · Accepted Answer

When people begin to expect a large stock market decline, they sell their stocks and buy bonds, which leads to an increase in demand for bonds. This shift in demand curve is to the right, causing an increase in bond prices and a decrease in interest rates.

When People Begin to Expect a Large Stock Market Decline,the