If there is an excess demand for bonds at a given price of bonds, then
A)the interest rate will fall.
B)the interest rate will rise.
C)the price of bonds will fall.
D)the interest rate may rise or the interest rate may fall depending upon the reasons for the excess demand for bonds.

Question

Quizplus · Accepted Answer

If there is excess demand for bonds at a given price, it means that there are more buyers than sellers in the market. This will lead to an increase in the price of the bonds, and a decrease in their yield or interest rate. Therefore, the interest rate will fall.

If There Is an Excess Demand for Bonds at a Given