Question
i) Why people buys public debt, even if it does not pay any interest? ii) if the market interest rate is equal to 5%, should
i) Why people buys public debt, even if it does not pay any interest? ii) if the market interest rate is equal to 5%, should you buy for 900 euros a coupon zero risk free bond that promises to pay 1000 euros in one year? iii) Which is the relationship between the price and the implicit rate of return of a bond? iv) Can a bond have a market price above it s face value? v) If a central bank wants to increase the market interest rates, they should buy or sell public debt? vi) If an economy faces high unemployment, the centra bank should buy or sell public debt? vii) How can Central Banks target a specific level of interest rate?
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