When the interest rate on a bond is ________ the equilibrium interest rate, in the bond market there is excess ________ and t
1 answer:
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Answer:
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- <u>1. The slope is negative</u>
- <u>2. The demand decreases when the prices increase.</u>
Explanation:
<em>Describe the slope of the demand curve?</em>
<em>The slope of the demand curve</em> is negative.
The demand curve is graphed on a coordinate plane with the price in the horizontal axis (typically the x-axis) and the demand on the vertical axis (y-axis).
Thus, the slope will be the rate of change of the demand over the change on the price.
Mathematically:
Since, as you move from left to right, on the x-axis, the prices increase, and the demand (on the y-axis) lowers, the change in demand is negative and the change in the prices is positive, resulting in a negative slope.
This is seen graphycally because the demand curve is decreasing (downward-sloping).
<em>How does the slope reflect the law of demand?</em>
The slope reflects perfectly <em>the law of demand</em> because the law of demand states that, since the resources are scarce, when the prices incrases the quantities demanded decrease.