The USTreasury Department Began Issuing Inflation-Indexed Bonds in Early 1997

question 124

Essay

The U.S.Treasury Department began issuing inflation-indexed bonds in early 1997.Since these assets are virtually risk free,both in terms of default risk and inflation risk,will they quickly replace all other kinds of assets that still entail risk of one kind or another,such as ordinary government bonds or corporate bonds? Explain.

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Definitions:

Executive Office

A branch of government responsible for enforcing laws and managing the administration of public policy, typically headed by the President or Prime Minister.

President

The elected head of state and government in a republic, particularly referring to the President of the United States.

Agencies

Organizations or bodies established by the government to perform specific functions, often involved in administering policy and regulation in various areas.

Unitary Executive Theory

A concept in constitutional law that suggests the President possesses the power to control the entire executive branch fully.