The reduction of brokerage commissions for trading common stocks that occurred in 1975caused the demand for bonds to ________ and the demand curve to shift to the ________.A) fall; rightB) fall; leftC) rise; rightD) rise; left
Question
The reduction of brokerage commissions for trading common stocks that occurred in 1975caused the demand for bonds to ________ and the demand curve to shift to the ________.A) fall; rightB) fall; leftC) rise; rightD) rise; left
Solution
The reduction of brokerage commissions for trading common stocks in 1975 made stocks more attractive to buy because they were cheaper to trade. This would decrease the demand for bonds as investors would move their money from bonds to stocks. When demand decreases, the demand curve shifts to the left. So, the correct answer is B) fall; left.
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