We Assign a Very Low Probability of Default to the U.S.Treasury

question 18

True/False

We assign a very low probability of default to the U.S.Treasury and thus assume that all Treasury bills will be paid in full at maturity and thus have a zero default premium.

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Definitions:

High School Diploma

A certificate awarded upon successful completion of secondary education, signifying that the recipient has met the required educational standards.

Income Effect

Adjustments in the income of people or economic systems and the consequent impacts on how much of a good or service is desired.

Substitution Effect

The change in consumption resulting from a change in the price of a good, leading consumers to replace more expensive items with cheaper alternatives.

Backward Bending

A concept in labor economics where an individual's labor supply curve bends backwards, indicating that they will supply less labor as wages increase beyond a certain point due to the substitution of leisure for work.