Suppose that in the economy described in Test Yourself Question 1, interest rates suddenly fall to 3

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Suppose that in the economy described in Test Yourself Question 1, interest rates suddenly fall to 3 percent. What will happen to the price of the bond that pays $3 per year?

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Suppose that interest rates are 6 percent in the economy and a safe bond promises to pay $3 per year in interest forever.

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Economics Principles and Policy

ISBN: 978-1305280595

13th edition

Authors: William Baumol, Alan Blinder

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Question Posted: Apr 16, 2018 02:47 AM

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Suppose that in the economy described in Test Yourself Question 1, interest rates suddenly fall to 3

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Economics Principles and Policy

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