Answered: b) Discuss one factor which can cause…

b) Discuss one factor which can cause the bond demand curve to shift and one factor which can cause the bond supply curve to shift?

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter31: Capital Markets

Section: Chapter Questions

Problem 9E

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b) Discuss one factor which can cause the bond demand curve to shift and one factor which can
cause the bond supply curve to shift?

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3. think through a couple of other such shifters using the bond supply/demand picture. a. Suppose that households learn that they are entering a recession. This means that they need to prepare for a higher risk of being unemployed for a long period of time. How will this possibility affect their demand for government bonds? Explain your answer. What will happen to the equilibrium interest rate in the government bond market? b. Suppose that banks are told that they must be backed by a lot more equity capital, unless their assets consist of government bonds. How will this affect their demand for government bonds? What will happen to the equilibrium interest rate in the government bond market?
Which three factors will shift the supply of bonds to the left?
Use the model of supply and demand for bonds to illustrate and explain the impact of each of the following on ( a ) equilibrium quantity of bonds ( b ) equilibrium prices and ( c ) yields . Make sure you support your answer by explaining " why " those effects occur . Be as specific as you can be . . A)Inflationary expectations in the economy fall which results in a much stronger response from bond issuers than investors B)Data shows that the real estate market is going to weaken
Trace the impact of selling more bonds by government on bond prices, interest rates, investment, aggregate demand, real GDP, and the price level.
Illustrate and explain how a new round of fiscal expansion in Europe due to the negative macroeconomic effects of the Russian-Ukrainian war could impact the bond market in terms of bond prices and bond yields, and explain the likely impact of this on interest rates across Europe.
Which of the following is (are) likely to lead to an increase in the demand for US bonds? a. All of the answers are correct b. Foreign interest rates decrease c. US government increases business taxes d. US interest rates decrease
Use the model of supply and demand for bonds to determine the impact on bond prices and yields of expectations that the real estate market is going to weaken. You must draw graph and clearly indicate the change in supply or demand curve
Starting from an equilibrium point, explain and illustrate with the help of a graph of bond supply and demand, the impact of each of the following on the bond’s quantity, price, and yield. A decrease in the expected future interest rate. A decrease in expected inflation with a stronger response on the issuers rather than buyers of bonds. The government decides to eliminate tax incentives on investments and to increase education spending with the additional funds. This change does not affect the government financing needs. Prospects of economic growth impact more bond issuers than bond buyers.
Draw the supply and demand curves for the bond and explain what will happen to the equilibrium price and quantity of the bond for each of the following situations: a) The inflation rate is expected to increase. b) The wealth of economic agents in the economy increases, but at the same time, the Ministry of Finance increases the corporate income tax rate. c) The economy is experiencing expansion. d) The government runs a budget deficit. e) Most corporate bonds (ratings) have been downgraded
An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for 1 year bonds can be estimated using the following equations:Demand: Price = (-0.5)*Quantity + 930Supply: Price = Quantity + 500Assume the face of the bond is $1,000.1. What is the expected equilibrium price and quantity of bonds in this market to 4 decimal places? Price$ Quantity 2. Given your answer to part (a), which is
Please provide full explanation Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.