Which of the Following Would Be Most Likely to Result

question 2

Multiple Choice

Which of the following would be most likely to result in low real interest rates over a lengthy period of time?

• A) Expansionary monetary policy.
• B) Large budget deficits.
• C) A savings glut as the result of higher sustained  oil prices and the expansion in the revenues of oil producers.
• D) An increase in the share of the population under age 50, a phase of life during which people borrow heavily to purchase "big ticket" items like houses and cars.

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Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a predetermined call price.

Redeemed

Refers to the repayment or buyback of securities, such as bonds or preferred stocks, before their maturity.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy.

Bondholders

Individuals or entities that hold the debt securities issued by corporations or governments, entitling them to receive a specified amount of interest and repayment of the principal.