Assume That Debt Maturity Markets Are Segmented, Such That Short-Term

question 68

Multiple Choice

Assume that debt maturity markets are segmented, such that short-term debt markets are funded by surplus units that are different from the surplus units that fund the long-term debt markets.Ifthe Treasury uses a relatively large proportion of ____ debt to finance the deficit, this may place upward pressure on ____ interest rates.

• A) long-term; long-term
• B) long-term; short-term
• C) short-term; long-term
• D) B and C

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Definitions:

Real GDP

The measure of a country's economic output adjusted for price changes and inflation, reflecting the true value of goods and services produced.

Percentage Change

A mathematical calculation that indicates the degree of change over time, expressed as a percentage.

National Income

The total value of all goods and services produced by a country's economy over a specific period, including income received from abroad.

Indirect Business Taxes

Taxes imposed on goods and services that indirectly affect companies, such as sales tax or value-added tax.