If the Treasury Issues an Unusually Large Amount of Bonds

question 6

Multiple Choice

If the Treasury issues an unusually large amount of bonds in the primary market, it places ____ on bond prices and ____ on yields to be earned by investors that purchase bonds and plan to holdthem to maturity.

• A) downward pressure; downward pressure
• B) downward pressure; upward pressure
• C) upward pressure; upward pressure
• D) upward pressure; downward pressure

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Definitions:

Direct Labor-Hours

The total hours of labor directly involved in producing goods or services, which is often used as a base for allocating overhead costs.

Variable Manufacturing Overhead

Costs that vary with the level of manufacturing activity, including items like indirect materials and utilities.

Fixed Manufacturing Overhead

These are the manufacturing costs that do not vary with the volume of production, including costs like rent, insurance, and salaries for certain employees.

Machine-Hours

The total hours that machinery is operational and in use on the production floor.