If 1-Year Interest Rates for the Next Three Years Are

question 79

Multiple Choice

If 1-year interest rates for the next three years are expected to be 4,2,and 3 percent,and the 3-year term premium is 1 percent,than the 3-year bond rate will be

• A) 1 percent.
• B) 2 percent.
• C) 3 percent.
• D) 4 percent.

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Definitions:

Marginal Utility

The additional satisfaction or utility gained by consuming one more unit of a good or service, which typically decreases with each additional unit consumed.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating the benefit received by consumers from participating in the market.

Utility

The satisfaction you derive from a good or service that you purchase. How much utility you derive is measured by how much you would be willing to pay.

Demand Schedule

A table or graph showing the quantity of a good or service that consumers are willing and able to purchase at various prices over a given period.