Suppose the U.S. Treasury issued $50 billion of short-term securities and sold them to the public. Other things held constant, what would be the most likely effect on short-term securities' prices and interest rates?

Question

Quizplus · Accepted Answer

If the U.S. Treasury issued $50 billion of short-term securities and sold them to the public, this would increase the supply of short-term securities in the market. This would lead to a decrease in prices and an increase in interest rates, as investors demand a higher return for purchasing these securities. Therefore, the most likely effect on short-term securities' prices and interest rates would be that prices would decline and interest rates would rise.