In: Economics
3. Draw and label the bond market graph covered in chapter 5. Then, using the graph, illustrate how the equilibrium price, yield to maturity, and quantity changes as a result of:
A) an increase in expected inflation. Explain the movement from one equilibrium to another.
B) A decrease in the riskiness of bonds. Explain the movement from one equilibrium to another.
C) an increase in the government budget deficit. Explain the movement from one equilibrium to another.