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Unformatted text preview: corporate bonds have higher risks meaning the demand is less increasing their interest r 9 Show why did mayors of major cities in the US complained about the Bush tax cuts. the demand on corporate bonds will increase meaning that the demand for muni's decre 10 If there is an excess demand for bonds, is the price above or below the equilibrium rate? Explain any price adjustment. the price is below the equilibrium price. Because the quantity demanded is high than the 11 People's wealth increases and the government runs a larger deficit. G increases (borrows more), W increases, supply and demand both increase 12 The rating on bonds issued by WorldCom is reduced from A to Ba by Moody's. risk increases the amount quantiy demanded decreases , b, expected inflation +, ei + , r, l , expected inflation and interest) L+ it- it -will need to issue less supply rates ease e price supplied...
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- Fall '10