A journalist explaining the complex interactions between various markets in the economy to his daughter, who...

  

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A journalist explaining the complex interactions between various markets in the economy to his daughter, who is in high school said: "when the government spends more than it collects in tax revenues. it must sell bonds to finance its excess expenditures. But selling new govermment bonds drives interest rates down and thus stimulates the economy by encouraging more investment and decreasing the foreign exchange rate, which helps our export industries." You overheard this statement. Do you agree or not; and why? One word answer is not enough. When the Fed sells government bonds in the open market, interest rates will rise. is this statement true or false? Explain your answer in a paragraph. Post your explanation to this statement "The exchange rate increases when there is a decrease in the demand for bonds." A journalist explaining the complex interactions between various markets in the economy to his daughter, who is in high school said: "when the government spends more than it collects in tax revenues. it must sell bonds to finance its excess expenditures. But selling new govermment bonds drives interest rates down and thus stimulates the economy by encouraging more investment and decreasing the foreign exchange rate, which helps our export industries." You overheard this statement. Do you agree or not; and why? One word answer is not enough. When the Fed sells government bonds in the open market, interest rates will rise. is this statement true or false? Explain your answer in a paragraph. Post your explanation to this statement "The exchange rate increases when there is a decrease in the demand for bonds." A journalist explaining the complex interactions between various markets in the economy to his daughter, who is in high school said: "when the government spends more than it collects in tax revenues. it must sell bonds to finance its excess expenditures. But selling new govermment bonds drives interest rates down and thus stimulates the economy by encouraging more investment and decreasing the foreign exchange rate, which helps our export industries." You overheard this statement. Do you agree or not; and why? One word answer is not enough. When the Fed sells government bonds in the open market, interest rates will rise. is this statement true or false? Explain your answer in a paragraph. Post your explanation to this statement "The exchange rate increases when there is a decrease in the demand for bonds." A journalist explaining the complex interactions between various markets in the economy to his daughter, who is in high school said: "when the government spends more than it collects in tax revenues. it must sell bonds to finance its excess expenditures. But selling new govermment bonds drives interest rates down and thus stimulates the economy by encouraging more investment and decreasing the foreign exchange rate, which helps our export industries." You overheard this statement. Do you agree or not; and why? One word answer is not enough. When the Fed sells government bonds in the open market, interest rates will rise. is this statement true or false? Explain your answer in a paragraph. Post your explanation to this statement "The exchange rate increases when there is a decrease in the demand for bonds." A journalist explaining the complex interactions between various markets in the economy to his daughter, who is in high school said: "when the government spends more than it collects in tax revenues. it must sell bonds to finance its excess expenditures. But selling new govermment bonds drives interest rates down and thus stimulates the economy by encouraging more investment and decreasing the foreign exchange rate, which helps our export industries." You overheard this statement. Do you agree or not; and why? One word answer is not enough. When the Fed sells government bonds in the open market, interest rates will rise. is this statement true or false? Explain your answer in a paragraph. Post your explanation to this statement "The exchange rate increases when there is a decrease in the demand for bonds." A journalist explaining the complex interactions between various markets in the economy to his daughter, who is in high school said: "when the government spends more than it collects in tax revenues. it must sell bonds to finance its excess expenditures. But selling new govermment bonds drives interest rates down and thus stimulates the economy by encouraging more investment and decreasing the foreign exchange rate, which helps our export industries." You overheard this statement. Do you agree or not; and why? One word answer is not enough. When the Fed sells government bonds in the open market, interest rates will rise. is this statement true or false? Explain your answer in a paragraph. Post your explanation to this statement "The exchange rate increases when there is a decrease in the demand for bonds."

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Interest rates are negatively correlated with bond prices due to opportunity cost Thus central ban... View the full answer