How does the amount of national debt influence the bond market in the United States?
What will be an ideal response?
Answer: Although taxes are the most obvious way the government raises money, it also sells bonds—securities through which it promises to pay buyers certain amounts of money by specified future dates. These bonds are attractive investments because they are extremely safe. The U.S. government is not going to default on them (that is, fail to make payments when due). Even so, they must also offer a decent return on the buyer's investment, and they do this by paying interest at a competitive rate. By selling bonds, therefore, the U.S. government competes with every other potential borrower for the available supply of loanable money. The more money the government borrows, the less money is available for the private borrowing and investment that increase productivity.
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Indicate whether the statement is true or false
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Which sentence is expressed correctly?
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a. True b. False Indicate whether the statement is true or false