Which result can be expected from an increase in the supply of bonds?

Question

Question

Answer 1

Answer #1

ANSWER:

Due to increase in supply of bonds , the market interest rate of the bond decreases which results in the following results:

1. There is an increase in wealth

2. There is a decrease in expected returns

3. There is a decrease in expected inflation.

4. There is decrease in risk as bond market becomes safe

5. Liquidity increases

Add a comment

Answer 2

Similar Homework Help Questions

27. Which factor(s) DO increase the supply of bonds? A. government deficit increase. B. increase in...

27. Which factor(s) DO increase the supply of bonds? A. government deficit increase. B. increase in expected inflation C. business cycle expansion. D. All of the Above E. None of the Above.
Which factor would NOT result in an increase in the supply of good? A. An increase...

Which factor would NOT result in an increase in the supply of good? A. An increase in the number of suppliers. B. A beneficial technological change C. A decrease in input prices D. An increase in input prices
Explain the means by which mutations can result in an increase in complexity and order in...

Explain the means by which mutations can result in an increase in complexity and order in species, and supply two examples of how complexity arose to support your answer.

22) Which of the following would not increase the supply curve of loanable funds? A) A...

22) Which of the following would not increase the supply curve of loanable funds? A) A Federal Reserve purchase does of U.S. Government securities from commercial banks. B) A higher interest rate. C) An increase in the nation's real income D) All of the above shift the supply. 23) In Keynes's liquidity preference framework, A) the demand for bonds must equal the supply of money B) the demand for money must equal the supply of bonds. C) an excess demand...
Suppose that in the bond market, there is an increase in the expected return on bonds...

Suppose that in the bond market, there is an increase in the expected return on bonds for investors, and an increase in the government's budget deficit. Then the result of these two changes will have what effect on the equilibrium price? push the price up push the price down it's impossible to tell which direction the price will go none of the above
An increase in the money supply can be caused by which of the following monetary tools?...

An increase in the money supply can be caused by which of the following monetary tools? Print more money Increase in government spending Decrease in taxes Purchase of Bonds by the federal reserve When Discussing wages, incomes and interest rates you always want to focus on the ----- Nominal Value Real value both are needed none of the above

Return on equity can increase as a result of an increase in which of the following...

Return on equity can increase as a result of an increase in which of the following ratios? Net income/ sales Sales/ total assets Total assets/ equity All of these will have a positive influence on the ROE.
20. An increase in the Bank rate will result in A. an increase in the money...

20. An increase in the Bank rate will result in A. an increase in the money supply. B. a decrease in the monetary base. C. an increase in the monetary base. D. no change in the monetary base. E. a depreciation of the Canadian dollar. 21. Among the numerous policies, the Bank of Canada has adopted to mitigate the impact of the Covid-19 outbreak; it has decided to "widen the collateral they accept to provide lending, and expanding the list...
A supply shock is A. an increase in the rate of inflation as a result of...

A supply shock is A. an increase in the rate of inflation as a result of expansionary fiscal policy, resulting in a leftward shift of the SRAS curve. B. a sudden increase in the price of an important natural resource, resulting in a leftward shift of the SRAS curve. O C. an increase potential GDP caused by a govemment expenditure multiplier, resulting in a leftward shift of the AD curve. D. an increase in both the inflation and the unemployment...

52 Question 52 of 60 > As a result of an increase in the supply of...

52 Question 52 of 60 > As a result of an increase in the supply of savings: O the interest rate increases, but the demand for borrowing decreases. O the interest rate decreases, but the amount of borrowing increases. O both the interest rate and the demand for borrowing decrease. O both the interest rate and the demand for borrowing increase.