Exam 18: Treasury Auctions, Public Debt, and Government Borrowing: Exploring the Us Treasury System

Smaller volume investors, including individuals, can place noncompetitive tenders which is in agreement to accept the single price established in the auction for US treasuries.

Large federal deficits may be funded by the issuance of new debt securities by the Treasury. The effect of these Treasury borrowings on financial market conditions and the economy depends on the source of borrowed funds.

According to your text, securities issued by the U.S. Treasury are regarded by investors as having zero default risk.

The principal role of U.S. government securities in the financial system is to minimize risk.

The longer the term to maturity of a U.S. government security, the greater its market risk.

The U.S. treasury does not set the interest, coupon, or discount rate, but leaves the determination of both interest rate and price to the:

Not including interest, the U.S. public debt, on a per capita basis, amounts to:

More than half of all Federal expenditures in the 2009 U.S. Government budget were made for:

On a per capita basis, the public debt of the United States amounts to approximately ____ for every man, woman and child living in the United States in 2009.

Government borrowing from depository institutions tends to increase total income and spending in the economy.

A budget deficit requires the Treasury to borrow in the financial markets while a budget surplus allows the Treasury to build cash balances or retire debt.

According to the textbook, the weakest of the policy tools in influencing economic conditions and the state of the economy and financial markets is:

Because of the strong economic growth of the 1990's, the public debt of the U.S. has fallen to its lowest level since 1960.

An example of marketable public debt is:

According to your text, the largest percentage of federal budget expenditures goes for:

Treasury borrowing from the Federal Reserve is equivalent to creating money; retiring government debt held by the Federal Reserve is equivalent to destroying money.

Budget surpluses indicate a withdrawal of greater amounts from the economy through tax collections than is put back into the economy through government spending. In the U.S. surpluses are generally saved to cover deficits in later years.

In the 21st century, the federal government was passing a bigger share of welfare and social programs back to the States, adding to their borrowing needs.

The impact of government debt retirement depends on who holds the debt securities the government retires.

Not including interest, the US public debt amounts to $40,365 on a per capita basis.