Question

Refer To The Figure On Your Right. Suppose Savings Increase. 1.) Use The Line Drawing

Refer to the figure on your right. Suppose that people become more pessimistic about stock returns. Demonstrate using the graphing tool how the supply of and/or demand for bonds change. 1.) Use the line drawing tool to show how the supply of and/or demand for bonds change. Carefully follow the instructions above, and only draw the required objects. the investors become optimistic about the stock market, then the bond supply curve Price of Bonds Quantity Bonds

Answer 1

It can be mentioned that if the people are optimistic about market, then the demand for stocks increase and because stocks and bonds are substitutes, the demand for bonds decrease but there would be no effect on the supply of bonds which means the supply of bonds remains the same as a result of which, the supply remains same and therefore

remains the same is the answer