The Statement "Bond Prices Vary Inversely with Changes in the Market

question 9

Multiple Choice

The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the

• A)market rate of interest increases, the contractual interest rate will decrease.
• B)contractual interest rate increases, then bond prices will go down.
• C)market rate of interest decreases, then bond prices will go up.
• D)contractual interest rate increases, the market rate of interest will decrease.

---

Definitions:

Federal Spending

Refers to the total amount of money the federal government expends on various programs, services, and debt interest.

Ability-To-Pay Principle

A tax principle that states taxes should be levied based on the taxpayer’s ability to pay, meaning higher-income individuals should pay more in taxes than lower-income individuals.

Government Employment

Employment within governmental bodies, including all levels from local to federal.

Labor Force

The sum of individuals in the workforce, comprising both those who are employed and those who are actively looking for work.