4 Funding Fiscal Policy

Identify the methods used bythe government to financefiscal policy.

Which of the following is true concerning government bonds?

• a.)
• The yield is always equal to the interest rate at the time of maturity.
• b.)
• The yield falls with the market price.
• c.)
• The yield increases when market price falls.
• d.)
• They are always paid off at maturity.