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Question
If the yield curve is flat for short maturities and then slopes downward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predictingA. a rise in short-term interest rates in the near future and a decline further out in the future.
B. constant short-term interest rates in the near future and a decline further out in the future.
C. a decline in short-term interest rates in the near future and a rise further out in the future.
D. a decline in short-term interest rates in the near future and an even steeper decline further out in the future.
Answer
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Related questions
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B. U.S. Treasury.
C. Federal Reserve System.
D. Bureau of Monetary Affairs.
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B. rapidly growing money supplies.
C. falling money supplies.
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B. banks.
C. over-the-counter markets.
D. finance companies.
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D. produce nothing of value and are therefore a drain on society's resources.
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Which of the followings does NOT describe the goods market in the ISLM model?
A. consumption function
B. investment function
C. government spending and tax
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