Question 1053 bond pricing, monetary policy, supply and demand
In his 31 August 2021 article 'The rich get richer and rates get lower', Robert Armstrong states that: "Savings chase returns, so when there are more savings and the same number of places to put them, rates of return must fall" (Armstrong, 2021).
Another way of saying that "rates of return must fall" when there are more savings (loanable funds) invested into fixed coupon government and corporate bonds, is that increased:
Question 1099 bond pricing, monetary policy, supply and demand
If a central bank was to use 'Quantitative Easing' (QE) where it buys government bonds, which of the below statements about the below graphs is correct?
To implement Quantitative Easing, a central bank will buy fixed coupon government bonds which will: