The Expectations Theory of the Term Structure Says That an Upward-Sloping

question 39

Multiple Choice

The expectations theory of the term structure says that an upward-sloping yield curve means that financial markets expect

• A)yields on corporate bonds to be higher than yields on government bonds
• B)stock market values to increase drastically
• C)interest rates to go up in the future
• D)the economy to go into a recession
• E)none of the above

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Definitions:

Marginal Cost

Marginal cost is the change in total cost that arises when the quantity produced is incremented by one unit; it's the cost of producing one more unit of a good.

Opportunity Cost

The loss of potential gain from other alternatives when one option is chosen.

Studying Economics

The academic examination of how societies use resources to produce goods and provide services, including the analysis of production, consumption, and distribution.