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Yield is a figure that shows the return you get on a bond. The simplest version of yield is calculated by the following formula: yield = coupon amount/price. When the price changes, so does the yield.
The supply curve for bonds shifts due to changes in government budgets, inflation expectations, and general business conditions. Deficits cause governments to issue bonds and hence shift the bond supply curve right; surpluses have the opposite effect.
The demand for bonds increases as the interest rate increases:? bonds are a more attractive investment as the interest rate increases, so the quantity of bonds demanded increases as the interest rate increases.
When the demand for a particular bond increases, all else equal, its price will rise and its yield will fall. The supply of a bond depends on how much the issuer of a bond needs to borrow from the market, such as a government financing its expenditure.
An increase in y raises the demand for money, an increase in R reduces the demand for money, and an increase in w raises the demand for money. By the budget constraint (4), the demand for money sets the demand for bonds, bd = w?md = w?(10y?5R+.