19-03-2021
Advanced Placement (AP)

contestada

Assume that the economy is in equilibrium. If aggregate demand decreases, nominal interest rates and bond prices will most likely change in which of the following ways?

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satashinakumoto satashinakumoto

20-03-2021

Interest rates up and bond prices down.
Higher interest rates make borrowing more expensive and thus demand from money decreases. Bond prices are inversely related to interest rates. This is a weird question because interest rates, which are set by the government, cause the change in aggregate demand not the other way around

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