Explain how the change in expectations causes bond market

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Reference no: EM13146267

Suppose that the conclusion of this weeks FOMC meeting, the federal reserve heightens hopes of further quantitative easing and investors flock to gold which could rise above $1700 per ounce. Answer true or false: "This move by investors into gold could result in a decline in bond prices and interest rates." Explain how the change in expectations causes the bond market to move from initial equilibrium E1 to final equilibrium E2. Hint: Equilibrium shifts left, prices go down.

Reference no: EM13146267

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