If the prices of bonds go up, the interest rates will fall and the quantity of investment demanded will rise.

Question

Quizplus · Accepted Answer

When bond prices go up, the yield or interest rate on those bonds falls. This makes bonds a more attractive investment option, thus increasing the quantity of investment demanded. Lower interest rates also make it cheaper for businesses to borrow money, increasing their investment in the economy.

If the Prices of Bonds Go Up, the Interest Rates