Deflation causes the demand for bonds to ________,the supply of bonds to ________,and bond prices to ________,everything else held constant.
A)increase;increase;increase
B)increase;decrease;increase
C)decrease;increase;increase
D)decrease;decrease;increase

Question

Quizplus · Accepted Answer

Deflation increases the real value of money, making bonds more attractive as they promise fixed returns, thus increasing demand. Suppliers, anticipating lower prices in the future, are less inclined to borrow (issue bonds), decreasing supply. Higher demand and lower supply for bonds increase their prices.

Deflation Causes the Demand for Bonds to ________,The Supply of Bonds