3 Explain how the current US government shutdown affects in

3 Explain how the current US government shutdown affects in terms of bond rating. Previously US govenment was down graded from AAA to AA by Standard and Poor.

Solution

The current US government shutdown will have a negative impact in terms of bond rating because the economy will now become less attractive for investors. The money invested in the economy will not be able to give better returns and thus the bond ratings would fall worse than before. That is from AA to AAA or B.

Fall in bond ratings are directly linked to fall in competitiveness of the economy. Thus the government shutdown will impact the competitiveness of the economy negatively and thus reduce the bond ratings.