Problem
Define the following, (i) What is a U.S. bond? (ii) Can the U.S. government ever run out of money to pay its obligations? Why? (iii) What are Federal Open Market Operations? (iv) If the central bank faces high inflationary pressures, what would you advise them to do in terms of Federal Open Market Operations (i.e., buying or selling of U.S. debt)? (v) If the central bank faces sluggish economic growth and inflation is not running high, what would you advise them to do in terms of Federal Open Market Operations (i.e., buying or selling of U.S. debt)? (vi) Why would foreign governments and investors purchase U.S. bonds?