All else constant, an increase in the supply of
A) increases the equilibrium quantity and the equilibrium price of bonds.
B) increases the equilibrium quantity and decreases the equilibrium price of bonds.
C) decreases the equilibrium quantity and increases the equilibrium price of bonds.
D) decreases the equilibrium quantity and the equilibrium price of bonds.
Ans: B) increases the equilibrium quantity and decreases the equilibrium price of bonds.
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The burden of a tax per unit of output will fall heavily on consumers when demand is relatively ________ and supply is relatively ________
A) inelastic; elastic B) inelastic; inelastic C) elastic; elastic D) elastic; inelastic
Which of the following statements about economic models is TRUE?
A) Economic models are not empirically testable. B) The predictive power of models is not as important as they serve the preferences of economists. C) Economic models are designed so that every detail of the real world can be analyzed. D) Every economic model is based on a set of assumptions.