Principles of Macroeconomics / Unit 2 MAC 0135 short lesson, about 20 seconds
Bond Prices and Interest Rates
Captions available
The idea
A bond promises to repay a fixed amount at a set date. Its interest rate is the gap between face value and price, so a lower price means a higher rate.
In practice
Selling more bonds pushes their price down and the rate up.
Where people slip
The bond diagram plots price where the loanable funds diagram plots the rate, so they move opposite ways.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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