Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 14 - Rent, Interest, and Profit - Questions - Page 310: 5a

Answer

A 10-year government bond has a low rate of interest because it is risk free in nature. This bond is long term and therefore pays a higher interest rate than one of short term based on its maturity.

Work Step by Step

This question asks you to understand bonds. Government bonds will always pay small amounts of interest because they are safe and basically risk-free.
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