Use the following to answer questions Exhibit: Effects of Monetary Policy -(Exhibit: Effects of Monetary Policy) The shift in the demand for bonds from D₁ to D₂, in Panel (b) Will result in a A)lower interest rate and no change in investment. B)higher interest rate and lower investment. C)lower interest rate and higher investment. D)higher interest rate and higher investment.

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A shift in the demand for bonds typically increases their prices, which inversely affects interest rates, leading to lower rates. Lower interest rates generally encourage borrowing and investment, hence higher investment.

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