What are the economic implications of an inverted yield curve?
What will be an ideal response?
An inverted yield curve normally precedes a recession. An inverted yield curve reflects market expectations of an expected decline in future short-term interest rates, which typically occur during recessions.
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Under what conditions is it likely that the labor supply curve may become backward bending? What roles do the income and substitution effects play?
Refer to Goods X and Y. If the indifference curves are downward sloping straight lines (rather than convex curves), then we can conclude that
Assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. a. X does not affect the individual’s utility. b. Y does not affect the individual’s utility. c. both X and Y affect the individual’s utility. d. neither good affects the individual’s utility.