Question

Everything else held constant, an increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to ___ and the demand curve to shift to the ___.

Answer 1

An increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to decrease and the demand curve to shift to the left.

Step-by-step explanation:

An increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to decrease and the demand curve to shift to the left.

When bonds become riskier compared to other investment options, investors are less likely to demand bonds as they seek safer alternatives. This decrease in demand causes a shift to the left on the demand curve.