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Between 2012 and 2020, the annual inflation rate in the United States was less than 3% every year. Some economists and policymakers were afraid that
Between 2012 and 2020, the annual inflation rate in the United States was less than 3% every year. Some economists and policymakers were afraid that during a future recession, the United States might experience deflation, or a decline in the price level. Suppose that after a recession begins, the federal government's budget deficit increases at the same time that the U.S. economy experiences deflation. Use a graph of the market for U.S. Treasury bonds to show the effect of these developments on the equilibrium price of Treasury bonds
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