Because the interest rates on Treasury note and bonds are fixed, the interest burden on the U.S. taxpayer remains unchanged when market interest rates increase.

Question

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When market interest rates increase, the prices of existing Treasury notes and bonds fall, since new issues come with higher yields. However, the interest burden on the U.S. taxpayer does not directly change due to market fluctuations, as the interest rates on existing Treasury securities are fixed at issuance. The statement might be misunderstood as referring to the cost of issuing new debt, which would indeed be higher in a rising interest rate environment, but the original question pertains to the interest burden of already issued fixed-rate securities, which does not change with market interest rates.

Because the Interest Rates on Treasury Note and Bonds Are