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a.The demand curve and supply curve for one-year discount bonds with a face value of$1,000 are represented by the following equations: B d : P

a.The demand curve and supply curve for one-year discount bonds with a face value of$1,000 are represented by the following equations:

B^d: P =0.6Q^d+ 1,140

B^s: Price = Q^s+ 700

i.What is the expected equilibrium price and quantity of bonds in this market?

ii.Given your answer to part (a), what is the expected interest rate in this market?

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