Answer:

Question 1 [1 point] The bond demand curve slopes ____ because a lower price level will _____ . 0 up, reduce expected return on holding bonds 0 down, increase the supply of bonds 0 down, reduce expected return on holding bonds 0 up, increase expected return on holding bonds 0 down, increase expected return on holding bonds 0 up, increase the supply of bonds Question 2 [1 point] in the bond market, the bond demanders are the ________ and the bond suppliers are 0 Al borrowers; lenders 0 Bl borrowers: advancers 0 Cl lenders; advancers O D} lenders; borrowers Question 3 [1 point] New data come in showing an increase in the inflation rate. You worry that inflation over the next year will be much higher than you thought previously. 0 You are now less likely to buy bonds, since higher expected inflation means that the expected real return from holding bonds is lower. This means that the bond demand curve will shift left. 0 You are now more likely to buy bonds, because the increase in inflation won't happen until next year, so the bond demand curve will shift right. 0 Your bond demand will not be affected, since nominal interest rates will not be affected. 0 You will move funds into a safe asset, like government bonds