If the Federal Reserve uses open-market operations to lower the interest rates on short-term U.S. government bonds, then as a consequence asset prices:
A. Increase, and the average expected rate of return on assets decreases
B. Decrease, and the average expected rate of return on assets increases
C. Increase, and the average expected rate of return on assets increases
D. Decrease, and the average expected rate of return on assets decreases
A. Increase, and the average expected rate of return on assets decreases
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The yield on a thirty-year Treasury bond is 8% at the same time as the yield on two-year Treasury note is 5%. This occurrence
A) indicates that the yield curve is downward sloping. B) is well explained by the segmented markets theory. C) is largely explained by the favorable tax treatment of Treasury notes. D) indicates that the bond market is anticipating that inflation will fall.
The economy is in macroequilibrium at the national income level where the aggregate expenditure curve intersects the 45-degree line
Indicate whether the statement is true or false