Question 27 (I) Municipal bonds that are issued to pay for essential public projects are exempt from federal taxation. (II) General obligation bonds do not have specific assets pledged as security or a specific source of revenue allocated for their repayment. A Both are false B () is true, (II) false. Both are true D() is false, (II) true Question 28 Factors that can cause the supply curve for bonds to shift to the left include: A a decrease in expected inflation. B an expansion in overall economic activity. an increase in the individuals' wealth. . D an increase in government deficits