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Euro-Zone Rates

by Elaine Schwartz    •    Jun 17, 2011    •    232 Views    •    TIME TO READ: 0 minutes Less than a minute

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.

An Economic Question: What story do the unemployment rate and 2-year bond numbers tell?

Answers:

Unemployment: Germany: 7%; Greece: 15.9%; Ireland: 14.8%; U.S. 9.1%; U.K. 7.7%

2-year bond: Germany: 1.75%; Greece 29.69%; Ireland: 12.95; U.S. .5%; U.K. 4.5%

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