Question

During an economic​ recession, A. the bond demand and supply curves both shift to the left and the equilibrium interest rate usually falls. B. the bond demand curve shifts to the​ left, the bond supply curve shifts to the​ right, and the equilibrium interest rate usually rises. C. the bond demand curve shifts to the​ right, the bond supply curve shifts to the​ left, and the equilibrium interest rate usually falls. D. the bond demand and supply curves both shift to the right and the equilibrium interest rate usually rises.

Answer 1

Answer:

B. the bond demand curve shifts to the​ left, the bond supply curve shifts to the​ right, and the equilibrium interest rate usually rises.

Explanation:

In this case:

• The supply increases, curve shifts to the right.
• The demand increases, curve shifts to the left
• Both the above shifts cause the price of bonds to decrease
• The above changes cause interest rate to increase

In this way, the quantity of bonds increase