Deflation a falling price level, which would mean a negative rate of inflationwas a very real fear during the early stages of the Great Recession.

Deflation—a falling price level, which would mean a negative rate of inflation—was a very real fear during the early stages of the Great Recession.  Using a supply and demand analysis of bonds, explain the effect of expected deflation on the interest rate.  A graph is required for this part of the question.  Make sure that you label the graph—axes, curves, and significant points—appropriately.  Make sure also that you include a few sentences by way of explanation.