-In the figure above,the price of bonds would fall from P2 to P1 if
A)there is a business cycle recession.
B)there is a business cycle expansion.
C)inflation is expected to increase in the future.
D)inflation is expected to decrease in the future.

Question

-In the figure above,the price of bonds would fall from P2 to P1 if
A)there is a business cycle recession. 
B)there is a business cycle expansion. 
C)inflation is expected to increase in the future. 
D)inflation is expected to decrease in the future.

Quizplus · Accepted Answer

During a business cycle expansion, interest rates typically rise as the economy grows, leading to a decrease in bond prices.

-In the Figure Above,the Price of Bonds Would Fall from P2