The Market for Bonds Is Initially Described by the Supply

Multiple Choice

The market for bonds is initially described by the supply of bonds - S₀, and the demand for bonds - D₀, with the equilibrium price and quantity being P₀ and Q₀. If the federal government were to offer larger tax breaks on the purchase of new equipment for businesses, all other factors constant, we would expect to see:

A) Bond supply curve to shift to S₁
B) Bond demand curve to shift to D₁
C) Bond supply curve to shift to S₂
D) Bond demand curve to shift to D₂