-Refer to the graph above to answer this question.How will people react if the interest rate is 3 percent?

Question

Quizplus · Accepted Answer

When interest rates are perceived as low, people tend to sell bonds because they anticipate that rates will rise in the future, which would decrease the value of existing bonds. Selling bonds increases the supply in the market, causing bond prices to fall. As bond prices fall, the yields (or interest rates) on those bonds increase to attract buyers.

-Refer to the Graph Above to Answer This Question