Money, Banking, and International Financedemand function would shift. Economists call a rightward shift an “increase in demand,” while
a shift to the left is a “decrease in demand.” We show demand function shifts in Figure 5.
Figure 4. A movement along a demand function
Figure 5. A demand function shifts
We listed six factors to show an increase in the demand function, shifting it rightward. We
show the increase in the demand function in Figure 6. When the investors increase their demand
for bonds, the demand function shifts rightward because investors buy more bonds. Thus, both
the equilibrium quantity, Q, and bond’s market price, P, rise. When we discount the bonds
using the present value formula, the market interest rate for the bonds fall.