Everything Else Held Constant, If the Federal Government Were to Guarantee

question 35

Multiple Choice

Everything else held constant, if the federal government were to guarantee today that it will pay creditors if a corporation goes bankrupt in the future, the interest rate on corporate bonds will ________ and the interest rate on government securities will ________.

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

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Definitions:

Ground Water

Water held underground in the soil or in pores and crevices in rock.

Equilibrium

A state in a chemical reaction where the rates of the forward and reverse reactions are equal, leading to no net change in the concentration of reactants and products.

Arsenopyrite

A metallic gray, natural mineral compound of arsenic, iron, and sulfur, often associated with the occurrence of gold.

Formula

A concise way of expressing information symbolically, as in a mathematical or chemical formula representing the composition of substances.