The bonds sold by the U.S. government to pay for the national debt are called a) Treasury securities. O b) debt securities. Oc) securitizations. O d) tradable securities. e) mortgage-backed securities.
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![The bonds sold by the U.S. government to pay for the national debt are called
a) Treasury securities.
O b) debt securities.
Oc) securitizations.
O d) tradable securities.
e) mortgage-backed securities.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7a48dea-fb5c-4654-8fb5-e0592b514973%2Fc0894e64-f356-4ab4-ab95-6b0ee53eb6ac%2Fmtzsuao_processed.jpeg&w=3840&q=75)
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- The following factors could lead to an Increase on the Supply of Bonds (shift down of supply curve) EXCEPT: An Economic Expansion O Increase in Government Deficit. Increase in Expected Inflation. OIncrease in return on Bonds. nomic ExpSuppose it becomes easier to sell bonds and bonds becomes more liquid relative to money. What would most likely occur? O A. Bond demand will increase, bond prices will increase, and the interest rates on bonds will decrease B. Bond demand will decrease, bond prices will decrease, and the interest rates on bonds will increas C. Bond demand will increase, bond prices will increase, and the interest rates on bonds will increase D. Bond demand will decrease, bond prices will decrease, and the interest rates on bonds will decrease.Which of the following is (are) likely to lead to an increase in the demand for US bonds? a. All of the answers are correct b. Foreign interest rates decrease c. US government increases business taxes d. US interest rates decrease
- 3. think through a couple of other such shifters using the bond supply/demand picture. a. Suppose that households learn that they are entering a recession. This means that they need to prepare for a higher risk of being unemployed for a long period of time. How will this possibility affect their demand for government bonds? Explain your answer. What will happen to the equilibrium interest rate in the government bond market? b. Suppose that banks are told that they must be backed by a lot more equity capital, unless their assets consist of government bonds. How will this affect their demand for government bonds? What will happen to the equilibrium interest rate in the government bond market?24)To reassure investors who were unwilling to buy mortgages in the secondary market, the U.S. Congress used two government-sponsored enterprises (GSEs) called, ________. The GSEs role was to sell bonds to investors and use the funds to purchase mortgages from _______. Select one: a. the Fed and the Treasury Department; Households b. the Fed and Treasury Department; Banks c. Fannie Mae and Freddie Mac; Households d. Fannie Mae and Freddie Mac; Banks e. Fannie Mae and Freddie Mac; Investment Banks6) The Baumol-Tobin analysis suggests that an increase in the brokerage fee for buying and selling bonds will cause the demand for money to ________ and the demand for bonds to ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease 7) The Baumol-Tobin analysis suggests that a decrease in the brokerage fee for buying and selling bonds will cause the demand for money to ________ and the demand for bonds to ________. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase 8) In the Baumol-Tobin analysis of transactions demand for money, either an increase in ________ or a decrease in ________ increases money demand. A) income; interest rate B) interest rates; brokerage fees C) brokerage fees; income D) interest rate; income 9) In the Baumol-Tobin analysis of the demand for money, either an increase in ________ or an increase in ________ increases money demand. A) income;…
- The range within which the federal funds rate can fluctuate is determined by a ceiling of the ______ and a floor of the ______. discount rate...IOER IOER....discount rate target federal funds rate...ioer ioer....target federal funds rate disount rate....target deferal funds rate4. Using the same demand curve and supply curve information from question 4, for one-year GASCOHER ‘bonds with a face value of $1.000 B BY: Price = Quantity + 400 Suppose that, a3 a result of monetary policy actions, the Federal Reserve reduces the bonds by 40. Assume that bond demand is constant a How does the Federal Reserve policy affect the bond supply equation? b, Calculate the effect of the Federal Reserve's action on the equilibrium quantity, price and interest rate in this marketThe demand curve and supply curve for one-year discount bonds with a face value of $1,030 are represented by the following equations: Bd: Price = -0.8Quantity + 1,160 BS: Price = Quantity + 690 Suppose that, as a result of monetary policy actions, the Federal Reserve sells 110 bonds that it holds. Assume that bond demand and money demand are held constant. Which of the following statements is true? O A. If the Fed decreases the supply of bonds in the market by 110, at any given price, the bond supply equation will become Price = Quantity + 840. O B. If the Fed increases the supply of bonds in the market by 110, at any given price, the bond supply equation will become Price = Quantity + 800. Oc. If the Fed increases the supply of bonds in the market by 110, at any given price, the bond supply equation will become Price = Quantity + 580. O D. If the Fed decreases the supply of bonds in the market by 110, at any given price, the bond supply equation will become Price = Quantity + 780.…
- 1. Assume that the GDP of Country A, a commodity exporter, can take on the values of $50, $55, $60, $65, and $70 with equal probability. To smooth consumption, the government of Country A issues $10 government bonds and sell them in the global financial market. If the government default, the costs of default are 25% of GDP. Lenders are competitive and understand these risks fully. a) If the lending rate is 32.5% per annum, what is the country's repayment threshold level of GDP (i.e., the GDP at which it is indifferent between defaulting and repaying the loan)? What is its probability of default? At what GDP level(s) will the country default? b) If the interest rate on safe loans is 6% annum, is the lending rate of 32.5% consistent with the breakeven condition of a competitive lender? Show your answer. c) Assume that the GDP of Country A can now take on the value of $75 (in addition to the five values above) due to higher volatility in commodity prices. Use the consumption-output…Due date: Friday November 20, 2015Too Big to FailAmerican International Group, INC (AIG) caseIntroductionAIG is the story of a company, and its network of financial partners, who tookunprecedented risk and fell because of it. To prevent global economic disaster, the U.S.government came to its rescue. This has resulted in the biggest taxpayer bailout of a privatecompany in American history.BackgroundAmerican International Group, Inc. â also known as AIG â is an Americanmultinational insurance corporation with more than 88 million customers in 130 countries. AIGcompanies employ over 64,000 people in 90 countries. The company operates through three corebusinesses: AIG Property Casualty, AIG Life and Retirement and United Guaranty Corporation(UGC). AIG Property Casualty provides insurance products for commercial, institutional andindividual customers. AIG Life and Retirement provides life insurance and retirement services inthe United States. And UGC focus…Interest Rate 0 Sm m Q Quantity of Money Refer to the diagram of the market for money. Given Dm and Sm, an interest rate of i3 is not sustainable because the: O demand for bonds in the bond market will decline and the interest rate will rise. O supply of bonds in the bond market will decline and the interest rate will rise. O supply of bonds in the bond market will increase and the interest rate will decline. O demand for bonds in the bond market will rise and the interest rate will fall.
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