A(n) ____ in the expected level of inflation results in ____ pressure on bond prices.

Question

Quizplus · Accepted Answer

A decrease in the expected level of inflation results in decreasing pressure on bond prices, as investors will demand lower yields to compensate for the lower inflation risk. Conversely, an increase in the expected level of inflation results in upward pressure on bond prices, as investors will demand higher yields to compensate for the increased inflation risk. Therefore, option C is the correct choice.

A(n) ____ in the Expected Level of Inflation Results in ____

A(n) in the Expected Level of Inflation Results in