Problem:
Suppose the demand and supply curves for one-year discount bonds with the face value of $1,000 are given by:
Bd : Price = -0.5 Quantity + 1130
Bs : Price = Quantity + 550
Required:
Question 1: What is the equilibrium price and quantity of bonds in this market?
Question 2: What is the interest rate in this market, given your answers above?
Note: Please explain comprehensively and give step by step solution.