If the level of inflation is expected to ____, there will be ____ pressure on interest rates and ____ pressure on the required rate of return on bonds.

Question

Quizplus · Accepted Answer

If the level of inflation is expected to increase, there will be upward pressure on interest rates and upward pressure on the required rate of return on bonds. This is because investors will demand a higher return to compensate for the eroding purchasing power of their money caused by inflation.

If the Level of Inflation Is Expected to ____, There