If the expected gains on stocks rise, while the expected returns on bonds do not change, then
A)the demand curve for bonds will shift to the left.
B)the supply curve for loanable funds will shift to the right.
C)the demand curve for loanable funds will shift to the left.
D)the equilibrium interest rate will fall.

Question

Quizplus · Accepted Answer

When expected gains on stocks rise, investors are more likely to shift their investments from bonds to stocks, leading to a decrease in the demand for bonds. This causes the demand curve for bonds to shift to the left.

If the Expected Gains on Stocks Rise, While the Expected