Suppose that the number of buyers and sellers of municipal bonds increases substantially. The result should be a(an)
A)increase in the prices of municipal bonds.
B)decrease in the prices of municipal bonds.
C)increase in U.S. Treasury bond yields.
D)decrease in the tax rate on municipal bond yields.

Question

Quizplus · Accepted Answer

An increase in the number of buyers and sellers of municipal bonds will likely lead to an increase in demand for these bonds, resulting in an increase in prices. This is because an increase in demand will put upward pressure on prices as investors compete for a limited supply of bonds.

Suppose That the Number of Buyers and Sellers of Municipal