Which of the following does NOT influence the demand for bonds?

The relationship between government borrowing and bond demand is more nuanced than a direct influence. While changes in government borrowing can affect the supply of bonds, which may indirectly influence their demand, it is not a direct factor influencing consumer preferences for bonds themselves.

When the government borrows more, it issues more bonds. This could lead to a situation where, depending on the economic context and investor preference, the demand for those bonds may not necessarily rise or fall directly in reaction to increased borrowing. Instead, it would depend on a range of factors, such as prevailing interest rates, economic conditions, and the perceived creditworthiness of the government.

In contrast, changes in household wealth typically lead to an increased demand for bonds as wealthier households may seek to diversify their investment portfolios. Similarly, expected inflation plays a significant role in bond demand; higher inflation expectations generally lead to lower bond demand because investors seek to avoid losing purchasing power. The attractiveness of bonds directly influences how appealing they are to investors based on risk and potential returns.

Thus, while government borrowing affects the bond market, it does so more through the supply side rather than being a fundamental determinant of bond demand itself.