The demand curve and supply curve for one-year discount bonds were estimated using the following equations:
Bd: Price = -2/5Quantity + 940
Bs: Price = Quantity + 500
Following a dramatic increase in the value of the stock market, many retirees started moving money out of the stock market and into bonds.
This resulted in a parallel shift in the demand for bonds, such that the price of bonds at all quantities increased $50.
Assuming no change in the supply equation for bonds, what is the new equilibrium price and quantity? What is the new market interest rate?