1. Assume that the following two events occur at the same time. Will interest rates increase or decrease? Will the quantity of borrowing/lending activity increase or decrease? You should answer these two questions for each event individually, and overall. (Note: You do not have to provide a graph. You can describe how the supply or demand curves shift, and identify the effects on the interest rate).

Large corporations issue a record amount of new debt to finance positive NPV projects.

Large foreign investors (including governments & mutual funds) unexpectedly decrease the amount of U.S Treasury securities in their portfolios.