According to the liquidity premium theory of the term structure
A) because buyers of bonds may prefer bonds of one maturity over another, interest rates on bonds of different maturities do not move together over time.
B) the interest rate on long-term bonds will equal an average of short-term interest rates that people expect to occur over the life of the long-term bonds plus a term premium.
C) because of the positive term premium, the yield curve will not be observed to be downward sloping.
D) the interest rate for each maturity bond is determined by supply and demand for that maturity bond.
B
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Raising the discount rate is: a. an expansionary policy because it raises the ratio of excess to total reserves in the banking system
b. a contractionary policy on the part of the member banks of the Fed because it raises the firms' costs of borrowing from them. c. a contractionary policy on the part of the Fed because it raises the commercial banks' cost of borrowing from it. d. an expansionary policy on the part of the member banks of the Fed because it raises their profits relative to those of the nonmember banks. e. an expansionary policy on the part of the Fed because increasing the interest rates that the banks are allowed to charge will increase their willingness to make loans.
The measure of final goods and services produced in the United States is the
A. Per capita GDP in the United States. B. Total sales of all goods during the year. C. GDP of the United States. D. Percentage change in the GDP of the United States.