Question: Use a S/D analysis for bonds and explain the impact of each of the following on the equilibrium quantity of bonds outstanding, and the equilibrium
Use a S/D analysis for bonds and explain the impact of each of the following on the equilibrium quantity of bonds outstanding, and the equilibrium bond prices and yields.
a. inflationary expectations in the economy fall evoking a much stronger response from issuers of bonds than investors in bonds.
b. all leading indicators point to stronger economic growth in the near future, and the response of bond purchasers dominates that of bond issuers.
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