Question
An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for bonds can be estimated using the following equations:
An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for bonds can be estimated using the following equations:
Demand: P =-(2/7)Q + 1000
Supply: P = (1/7)Q + 700
a. What is the expected equilibrium price and quantity of bonds in this market? b. Given your answer to part (a), which is the expected interest rate in this market?
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Intermediate Financial Theory
Authors: Jean-Pierre Danthine, John B. Donaldson
3rd Edition
0123865492, 9780123865496
