(1) Describe the demand curve and Supply curve of Bonds

(2)What would happen to the demand curve for bonds, if

(a)market interest rate is expected to decrease in near future;

b) Expected inflation to increase in near future

C) bonds become more risky compared to other assets

d) bond market becomes more illiquid

e) price of the bond goes down and return on bond goes up

Note: In the above question 2, be careful to make a distinction between movement along the demand curve and shift in the demand curve

(3) What would happen to supply curve of bonds if

(a)government deficit increases

(b) the return(profitability) on investment increases in the market

(c) inflation is expected to go up

(4) What will happen to price and return on bonds when the economy starts experiencing expansion phase