- In the figure above,a factor that could cause the demand for bonds to shift to the right is
A)an increase in the riskiness of bonds relative to other assets.
B)an increase in the expected rate of inflation.
C)expectations of lower interest rates in the future.
D)a decrease in wealth.

Question

- In the figure above,a factor that could cause the demand for bonds to shift to the right is
A)an increase in the riskiness of bonds relative to other assets. 
B)an increase in the expected rate of inflation. 
C)expectations of lower interest rates in the future. 
D)a decrease in wealth.

Quizplus · Accepted Answer

Expectations of lower interest rates in the future would make current bonds, which have higher interest rates compared to what is expected in the future, more attractive. This increases the demand for bonds, shifting the demand curve to the right.

- in the Figure Above,a Factor That Could Cause the Demand