Question

Suppose the demand for bonds and the supply of bonds shifts leftward at the same time....

Suppose the demand for bonds and the supply of bonds shifts leftward at the same time. what happens to the equilibrium price of bonds?

A. Bond price does not change
B. We do not have enough information to answer this question
C. Bond prices declines
D. Bond prices increases
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Answer #1

A) Bond price does not change

When the demand for bonds and the supply of bonds shifts leftward it means the quantity demand decreases and the price also decreases there and in case of supply the quantity supply will decrease but the price will go upwards. When we notice the curve of demand and supply curve we can identify that. So here there is a neutralising effect will occur and the price become constant and the Quantity will decrease.

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