Use supply and demand to model the equilibrium price for bonds. For each part below, state whether the price of bonds – and the interest rate - will increase, decrease, or remain the same. For parts (a) and (b), justify your answer graphically.
a. Stocks become viewed as increasingly risky at their current prices.
b. Firms view consumer demand as growing enough to make new projects more profitable.
c) both (a) and (b) happen at the same time.