When the demand for bonds ________ or the supply of bonds ________,interest rates rise.
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases

Question

Quizplus · Accepted Answer

When the demand for bonds decreases, it means fewer people want to buy them, so sellers might have to lower the price, which effectively raises the interest rate (since bond prices and yields move inversely). Conversely, when the supply of bonds increases, there are more bonds available than people want to buy, which can also lead to lower prices and thus higher interest rates.

When the Demand for Bonds ________ or the Supply of Bonds