According to the liquidity premium theory, a yield curve that is flat means that
A) bond purchasers expect interest rates to rise in the future.
B) bond purchasers expect interest rates to stay the same.
C) bond purchasers expect interest rates to fall in the future.
D) the yield curve has nothing to do with expectations of bond purchasers.
C
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The more a nation depends on imported raw materials, the ________ closely linked is its marginal cost to its nominal aggregate demand, thus the ________ for the typical firm is a policy of indexing price to nominal aggregate demand
A) more, riskier B) more, safer C) less, riskier D) less, safer
The yield on a bond is that interest rate for which the present value of the interest and principal payments promised by the bond are
a. equal. b. as large as possible. c. equal to the price of the bond. d. equal to the face value of the bond.