econ 100 question for week 7
You buy a Government bond at a rate of 4%. A year later, the rate is 8% and your bond is worth half of what you boght it at, so it has a market rate of 8% to new buyers. You lent money to the Government. Did you win? You are the bank, and your money is now stuck for 30 years under the present interest rate. Didi you get a good deal?