Under the liquidity premium theory the shape of the yield curve depends on
A) the relative return of investments in common stocks versus investments in corporate bonds.
B) the size of the federal government's budget deficit.
C) government tax treatment of long-term versus short-term bonds.
D) the expected pattern of future short-term rates and the size of the term premium at each maturity.
D
You might also like to view...
According to the Keynesian model, real wages should
A) remain constant. B) fall during recessions. C) rise during recessions. D) stay the same during recessions but rise during expansions.
Which of the following is an implication of the law of diminishing returns?
a. Total output will decline as more workers are hired. b. In the long run, average total cost will eventually decline as output is expanded. c. In the short run, expansion of output will eventually lead to increases in marginal cost and average total cost. d. A doubling of all inputs will lead to more than a doubling of output.