When the government sells more bonds,what else happens?
A) Interest rates go down and consumer spending rises.
B) Interest rates go down and savings go up.
C) Interest rates go up and consumer spending rises.
D) Interest rates go up and savings go up.

Question

Quizplus · Accepted Answer

When the government sells more bonds, it increases the supply of bonds in the market. To attract buyers, the government must offer higher interest rates on these bonds. As interest rates on bonds increase, other interest rates in the economy tend to rise as well, making borrowing more expensive. This can lead to a decrease in consumer spending as loans for big purchases become more expensive. Additionally, higher interest rates make saving more attractive, as the return on savings accounts and other fixed-income investments increases.

When the Government Sells More Bonds,what Else Happens