Question 7(1 point)

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Everything else held constant, during a business cycle expansion, the supply of bonds shifts to the ________ as businesses perceive more profitable investment opportunities, while the demand for bonds shifts to the ________ as a result of the increase in wealth generated by the economic expansion.

Question 7 options:

A)

left; left

B)

left; right

C)

right; left

D)

right; right

Question 8(1 point)

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In a business cycle expansion, both bond demand and supply curves can shift. However, data show that the dominating effect on the bond market is that firms want to borrow more due to good business opportunities. If this is the case, we will observe in a business cycle expansion that:

Question 8 options:

bond prices and interest rates increase

bond prices increase while interest rates fall

bond prices fall while interest rates increase

bond price and interest rates will fall