Question
Postponing the "Fiscal Deficit" target or Fiscal Slippage may result in which of the following:
Select the correct answer using the code given below:
- Decrease in bond prices
- Increase in bond yield
- Increase in market interest rates
- Decrease in market interest rates
Select the correct answer using the code given below:
Answer: Option D
Answer: (d)
When government postpones its fiscal deficit target or when the fiscal deficit increases then the interest rate in the economy goes up because the government borrows more (demand-supply concept).
When the interest rate in the economy goes up bond prices come down and the return/yield on bonds goes up.
Was this answer helpful ?
Answer: (d)
When government postpones its fiscal deficit target or when the fiscal deficit increases then the interest rate in the economy goes up because the government borrows more (demand-supply concept).
When the interest rate in the economy goes up bond prices come down and the return/yield on bonds goes up.
Was this answer helpful ?
More Questions on This Topic :
Latest Videos
Latest Test Papers
Submit Solution