Question
Interest rates on U.S. Treasury bills are typically much lower than interest rates on U.S. Treasury notes and bonds. If the federal government wants to
Interest rates on U.S. Treasury bills are typically much lower than interest rates on U.S. Treasury notes and bonds. If the federal government wants to reduce the interest charges it pays when it borrowsmoney, whydoesn't the Treasury stop selling Treasury notes and bonds and sell onlybills?
A. If the Treasury stopped selling Treasury notes andbonds, it faces the risk that fewer investors will purchase theshort-term bills.
B. When the Treasury rolls over theshort-term bills, it faces the risk that interest rates on newshort-term bills may have risen.
C. When the Treasury rolls over theshort-term bills, it faces the risk that interest rates on newshort-term bills may have fallen.
D. If the Treasury stopped selling Treasury notes andbonds, it increases the risk for default on itsshort-term bills.
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