Question at position 9 If people expect real estate prices to increase significantly, the _____ curve for bonds will shift to the _____supply; rightsupply; leftdemand; rightdemand; left单项选择题
A
supply; right
B
supply; left
C
demand; right
D
demand; left

Question

Question at position 9 If people expect real estate prices to increase significantly, the _____ curve for bonds will shift to the _____supply; rightsupply; leftdemand; rightdemand; left

BlackTom AI · Accepted Answer

Higher expected returns from real estate make bonds less attractive now, so the bond demand curve shifts left.

1. Relevant concepts and knowledge points
- Asset substitution: investors allocate wealth to assets with higher expected returns.
- Demand for an asset depends on its expected return relative to alternatives; higher expected returns elsewhere reduce current demand.
- A leftward shift of a demand curve means at each price people want to hold fewer bonds.
- Shifts in supply/demand are distinct from movements along curves.

2. Step-by-step reasoning
- Step 1: People expect real estate prices to increase significantly, implying higher expected returns from investing in real estate.
- Step 2: Investors compare expected returns of real estate vs bonds. Real estate’s expected return rises relative to bonds.
- Step 3: Some current holders of wealth switch from bonds into real estate to capture the expected gain.
- Step 4: This shift of preferences reduces the quantity of bonds demanded at every price, i.e., the bond demand curve shifts left.

3. Intermediate implications (no numerical calculations required)
- With a leftward demand shift for bonds (holding supply fixed), equilibrium bond prices fall and yields (interest rates) rise.
- The key mechanism is the substitution effect driven by higher expected returns in the alternative asset (real estate).

4. Why the correct answer is correct
- The prompt asks which bond curve shifts and in what direction. Expectations of higher returns elsewhere reduce the desire to hold bonds now, which is precisely a decrease in demand: demand curve shifts left. That matches “demand; left.”

5. Why the other options are incorrect
- “supply; right”: That would imply more bonds are offered for sale because of expectations about real estate; while selling by current bondholders could increase supply, the primary and standard effect described is a decrease in demand for bonds, not an increase in supply.
- “supply; left”: That would mean fewer bonds offered, inconsistent with investors selling bonds to buy real estate.
- “demand; right”: Contradicts the logic; higher expected returns in real estate would not increase demand for bonds.

6. Conclusion
Therefore, the bond curve that shifts is demand, and it shifts left—confirming the provided answer: demand; left.

Question at position 9 If people expect real estate prices to increase significantly, the _ curve for bonds will shift to the _supply; rightsupply; leftdemand; rightdemand; left单项选择题

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Question at position 9 If people expect real estate prices to increase significantly, the _____ curve for bonds will shift to the _____supply; rightsupply; leftdemand; rightdemand; left单项选择题