Question #61

It is reported that large international buyers of US Government treasury bonds are getting worried that the US deficit is getting too large. If they stop buying the bonds then

• the US Government will run out of money and will have to cut back on its spending.
• this may drive up treasury bond yields but cannot reduce the capacity of the US Government to service its spending program.
• this will lead to the US dollar being abandoned as the convertible currency.

Answer #627

Answer: this may drive up treasury bond yields but cannot reduce the capacity of the US Government to service its spending program.

Explanation

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