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Suppose that the government runs a strong budget surplus- At the same.pdf

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Suppose that the government runs a strong budget surplus. At the same time, bond liquidity has increased significantly. According to our supply and demand model of the bond market, which of the following statements should be true: A. The change in yields is ambiguous B. Bond prices increase and therefore yields increase C. Bond prices increase and therefore yields decline D. Bond prices decrease and therefore yields increase.

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Suppose that the government runs a strong budget surplus. At the same time, bond liquidity has increased significantly. According to our supply and demand model of the bond market, which of the following statements should be true: A. The change in yields is ambiguous B. Bond prices increase and therefore yields increase C. Bond prices increase and therefore yields decline D. Bond prices decrease and therefore yields increase

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