Assume That the Treasury Experiences a Large Increase in the Budget

question 79

Multiple Choice

Assume that the Treasury experiences a large increase in the budget deficit and issues a large number of T-bills. This action will ____ the supply of T-bills in the market and place ____ pressureon the yield of T-bills.

• A) decrease; downward
• B) decrease; upward
• C) increase; upward
• D) increase; downward

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Definitions:

Opportunity Costs

Missing out on potential gains from different choices due to opting for a particular alternative.

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.

Opportunity Cost

Opportunity cost represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

High End Stores

Retailers that sell luxury or premium products and services, often characterized by high prices and quality.