Suppose that there is concern about the stability of the global financial system causing a flight to the safety of U.S.government bonds.Which of the following is NOT a likely consequence?
A) higher price of U.S. government bonds
B) lower interest rate on U.S. government bonds
C) increased demand for U.S. government bonds
D) reduced supply of U.S. government bonds

Question

Quizplus · Accepted Answer

If there is a flight to safety and increased demand for U.S. government bonds, it is unlikely that there will be a reduced supply of U.S. government bonds. In fact, it may lead to an increase in supply as the government may issue more bonds to meet the demand. Therefore, D is not a likely consequence. A, B, and C are all likely consequences of a flight to safety.

Suppose That There Is Concern About the Stability of the Global