The Treasury yield curve will be downward sloping when
A) investors expect future short-term interest rates to be significantly lower than current short-term interest rates.
B) investors expect future short-term interest rates to be significantly higher than current short-term interest rates.
C) short-term interest rates are significantly lower than long-term interest rates.
D) short-term interest rates are equal to long-term interest rates.
A
You might also like to view...
Use a graph to show the differences in the central bank reaction function if the Fed is more tolerant or less tolerant of deviations from inflation in the short run
What will be an ideal response?
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.