Suppose that savers become less willing to purchase medium-quality corporate bonds. The result will be that the prices of medium-quality corporate bonds will
A)fall relative to the price of U.S. Treasury securities, but rise relative to the price of high-quality corporate bonds.
B)rise relative to the price of U.S. Treasury securities, but fall relative to the price of high-quality corporate bonds.
C)rise relative to the prices of U.S. Treasury securities and high-quality corporate bonds.
D)fall relative to the prices of U.S. Treasury securities and high-quality corporate bonds.

Question

Quizplus · Accepted Answer

If savers are less willing to purchase medium-quality corporate bonds, demand for these bonds decreases, leading to a fall in their prices relative to both U.S. Treasury securities and high-quality corporate bonds.

Suppose That Savers Become Less Willing to Purchase Medium-Quality Corporate