A permanent increase of borrowing by the U.S. Treasury to finance growing budget deficits will:
A. result in U.S. Treasury yields being higher than high-grade corporate bonds.
B. result in lower yields on corporate bonds.
C. cause the yield on U.S. Treasury bonds to increase, but still be lower than corporate bonds.
D. result in the price of U.S. Treasury bonds rising.
Answer: C
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A) economies of scale B) patents and copyrights C) control of resources D) all of the above
Considering only its direct effect on income, expansionary fiscal policy tends to:
A. decrease income and imports, shifting the U.S. trade balance in the direction of a surplus. B. increase income and imports, shifting the U.S. trade balance in the direction of a surplus. C. decrease income and imports, shifting the U.S. trade balance in the direction of a deficit. D. increase income and imports, shifting the U.S. trade balance in the direction of a deficit.