Hi,
Can anyone help me understand the difference between a T-Bill and a government bond when trying to increase the money supply?
My understanding is that T-Bills are short term and sold at a discount, allowing the holder the make a return at the end of the term. For a bond, these are longer term, offer a coupon and redeemed at par. Is that correct?
However, in terms of monetary policy, I'm not understanding why one will increase the money supply and why the other does not. (For reference, an example question is in the course notes, page 9, ch15, I'll attach a snapshot here).
Any help would be massively appreciated.
Thanks.
Can anyone help me understand the difference between a T-Bill and a government bond when trying to increase the money supply?
My understanding is that T-Bills are short term and sold at a discount, allowing the holder the make a return at the end of the term. For a bond, these are longer term, offer a coupon and redeemed at par. Is that correct?
However, in terms of monetary policy, I'm not understanding why one will increase the money supply and why the other does not. (For reference, an example question is in the course notes, page 9, ch15, I'll attach a snapshot here).
Any help would be massively appreciated.
Thanks.