If the U.S.government's borrowing needs increase, in the bond market this would be seen as:

Question

Quizplus · Accepted Answer

If the U.S. government's borrowing needs increase, it will issue more bonds to raise money, increasing the supply of bonds in the market. In turn, this will shift the bond supply curve to the right, leading to a potential decrease in bond prices and an increase in interest rates. Demand for bonds may also decrease as investors may seek higher yields elsewhere, but this is a secondary effect. The primary effect is the increase in bond supply.

If the USGovernment's Borrowing Needs Increase, in the Bond Market This Would