Bond Market:

The US Federal government has been issuing a bit more than 1 Trillion dollars in new bonds each year since 2009 (to cover budget deficits). These bonds are called "T bills". Assume the market for T bills can be described with ordinary demand and supply curves.

A. Show how the release of a new trillion dollars in bonds wold impact the market. Show the impact on price, quantity, and explain how this will impact interest rates.

B. Interest rates actually declined most of the time since 2009 (some increases lately, but you can ignore that). Show and explain what might have happened to keep interest rates low (use a new diagram).