Answered step by step
Verified Expert Solution
Question
1 Approved Answer
As the economy grows, interest rates tend to rise because firms have more investment opportunities and so the firms issue more bonds and the increased
As the economy grows, interest rates tend to rise because
firms have more investment opportunities and so the firms issue more bonds and the increased supply of these bonds will cause the price of the bonds to decrease and bond prices and interest rates move in opposite directions. |
firms have fewer investment opportunities and so the firms issue more bonds and the increased supply of these bonds will cause the price of the bonds to decrease and bond prices and interest rates move in opposite directions. |
firms have fewer investment opportunities and so the firms issue fewer bonds and the decreased supply of these bonds will cause the price of the bonds to increase and bond prices and interest rates move in the same direction. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started