Following the downgrade of U.S.debt by Standard & Poor's in 2011
A) other rating agencies also downgraded U.S. debt.
B) interest rates spiked as investor's perception of risk increased.
C) investors didn't seem to be any more concerned about default risk than before the downgrade.
D) the U.S. implemented a plan to significantly reduce its budget deficit later that year.

Question

Quizplus · Accepted Answer

Despite the downgrade by Standard & Poor's in 2011, the market reaction showed that investors did not significantly change their perception of the default risk of U.S. debt. In fact, interest rates on U.S. Treasury securities did not spike as might have been expected; instead, they remained relatively low, indicating continued confidence in the U.S. government's ability to meet its obligations.

Following the Downgrade of U