A Permanent Increase of Borrowing by the U

question 58

Multiple Choice

A permanent increase of borrowing by the U.S. Treasury to finance growing budget deficits will:

• A) result in U.S. Treasury yields being higher than high-grade corporate bonds.
• B) result in the price of U.S. Treasury bonds rising.
• C) cause the yield on U.S. Treasury bonds to increase, but still be lower than corporate bonds.
• D) result in lower yields on corporate bonds.

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Definitions:

Compressed

Reduced in volume as a result of applied pressure.

Atm

Standard atmosphere, a unit of pressure defined as 101,325 Pa; commonly used as a reference pressure in physics and meteorology.

Container

An object used to hold, store, or transport items, ranging from simple boxes to large shipping containers.

Volume

The amount of space that a substance or object occupies or that is enclosed within a container.