The equilibrium price and corresponding equilibrium interest rate in the bond market are found where
A)the bond demand curve and the bond supply curve intersect.
B)the bond demand is at its peak.
C)the bond supply is at its peak.
D)cannot be determined looking at the bond demand and bond supply curves.

Question

Quizplus · Accepted Answer

The equilibrium price and corresponding interest rate in the bond market are determined by the intersection of the bond demand and bond supply curves. This is the point where the quantity of bonds demanded by investors equals the quantity of bonds supplied by issuers, resulting in a market-clearing price and interest rate. Therefore, choice A is the correct answer.

The Equilibrium Price and Corresponding Equilibrium Interest Rate in the Bond