Please match each of the following countries with its unemployment rate and borrowing rate:
Countries: Germany, Greece, Ireland; and the U.S. and the U.K.
Unemployment rates: 9.1%, 7.7%, 7%, 15.9%, 14.8%
2-year bond rates: .5%, 4.5%, 1.75%, 29.69%, 12.95%
The answers are below.
The Economic Lesson
As an I.O.U., a bond is a loan. If a loan is risky, it pays a higher rate of interest to entice people to make their money available. By contrast, investors looking for safety and security are happy to accept a low return–less interest–when they purchase a bond.