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"The April U.S. trade deficit narrowed by 41 percent from March. Investors greeted the news with gusto, driving bonds more than a point higher in minutes. It was a classic suckers' rally. Traders soon realized the trade improvement was because of a 23 percent climb in exports. Fears of surging demand in an environment of near?full employment and capacity constraints were rekindled. Prices turned on a dime and wound up nearly two points off their highs by the end of the day."

25. Bond prices fell because higher exports: a) cause higher imports, decreasing economic activity, causing bond sales b) means higher demand for the U.S. dollar, causing people to sell bonds to get dollars c) create inflationary pressures, increasing inflation expectations and thus increasing the interest rate d) create inflationary pressures, increasing inflation expectations and thus decreasing the interest rate