If the rate of growth in the economy is falling sharply, would you expect bond prices to rise or fall while the growth rate is falling, and why? Question 2Answer a. Bond prices are likely to fall because the central bank is likely to cut interest rates to stimulate the economy, creating more investment opportunities. Investors are likely to switch away from bonds into other investments, pushing down bond prices. b. Bond prices would be expected to rise because the central bank is likely to cut interest rates to stimulate the economy, which reduces the investor's real rate of return, pushing down yields and pushing up prices. c. Bond prices would be expected to rise because the central bank is likely to cut interest rates to stimulate the economy. This results in a reduction in investors' required rate of return, pushing down yields and pushing up prices. d. Bond prices would be expected to fall because the central bank is likely to push up interest rates to stimulate the economy, pushing up yields and pushing down prices