When the Treasury bond market becomes more liquid,other things equal,the demand curve for corporate bonds shifts to the ________ and the demand curve for Treasury bonds shifts to the ________.
A)right;right
B)right;left
C)left;right
D)left;left

Question

Quizplus · Accepted Answer

When the Treasury bond market becomes more liquid, investors are more willing to hold Treasury bonds because they are easier to buy and sell. This increases the demand for Treasury bonds, shifting the demand curve to the right. At the same time, the increased liquidity of the Treasury bond market makes corporate bonds relatively less attractive, reducing the demand for corporate bonds and shifting the demand curve to the left. Therefore, the correct choice is (C) left; right.

When the Treasury Bond Market Becomes More Liquid,other Things Equal,the