Interest Rates : Bond Prices :: Economic Activity : ?

Interest rates and bond prices have an inverse relationship, meaning when interest rates go up, bond prices usually go down, and vice versa. This is because when new bonds are issued with higher interest rates, older bonds with lower rates become less valuable. Similarly, economic activity affects employment, spending, and investment in a similar way. When economic activity is strong, businesses thrive, leading to more jobs and higher consumer spending. For example, if a country experiences a boom and people start earning more, they will likely spend more money, which can lead to inflation, just like how changing interest rates affect bond prices.