Assume That the Treasury Experiences a Large Decrease in the Budget

question 17

Multiple Choice

Assume that the Treasury experiences a large decrease in the budget deficit and purchases a large number of T-bills. This action will ____ the supply of T-bills in the market and place ____ pressure on the yield of T-bills.

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

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Definitions:

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods once a year.

Retirement

The point in time when an individual chooses to leave the workforce permanently, often accompanied by receiving pension or retirement savings.

Annual Rate of Return

This is the percentage change in the value of an investment over a one-year period, taking into account both capital gains and income received.

Investment

The allocation of resources, usually financial, in expectation of a future return, which may include interest earnings, dividends, or appreciation in value.