Answer ALL multiple-choice questions from this section. Each question is worth 5 marks.

To answer the multiple-choice questions, note down the answer on your answer page. You also need to offer a brief justification on your answer booklet for each one of your answers in this section. (minimum 100 words per question)

1. Assume that the Treasury experiences a large decrease in the budget deficit and purchases a large number of T-bills. This action will ____ the supply of T-bills in the market and places ____ pressure on the yield of T-bills.

a. decrease; downward

b. decrease; upward

c. increase; upward

d. increase; downward