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H 1. Suppose supply and demand for 1-year discount bond with face value of 1100 AED are given by: B' = -100+ 0.5 P, and

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H 1. Suppose supply and demand for 1-year discount bond with face value of 1100 AED are given by: B' = -100+ 0.5 P, and & : B4 = 900 -0.5 P respectively where P is the price, B is the quantity. a) Find the equilibrium quantity and price of bonds and the yield. b) Suppose the economy started to overheat and the Central Bank raised the interest rate to 12% and the quantity of bonds remained the same in equilibrium. Find the new equilibrium price of bonds in the bond market

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