Changes in expectations or opportunity costs
A)Shift the bond supply and demand curves.
B)Shift the bond supply curve but not the bond demand curve.
C)Shift the bond demand curve but not the bond supply curve.
D)Do not shift the bond supply and demand curves.

Question

Quizplus · Accepted Answer

Changes in expectations (such as expectations about inflation or the economy) or changes in opportunity costs (such as changes in returns from alternative investments) can affect both the willingness of investors to buy bonds (demand) and the willingness of entities to issue new bonds (supply), thus shifting both the bond supply and demand curves.

Changes in Expectations or Opportunity Costs