Which of the Following Explains Why the Size and the Direction

question 64

Multiple Choice

Which of the following explains why the size and the direction of the gap between long- and short-term interest rates is a predictor of stages in the business cycle?

• A) The time period with higher rates is likely to have higher economic activity than the time period with lower rates.
• B) The time period with higher rates is likely to have slower economic activity than the time period with lower rates.
• C) When the rates are unequal, the economy is in expansion or contraction; when the rates are equal, the economy is in a peak or trough.
• D) When the rates are equal, the economy is in expansion or contraction; when the rates are unequal, the economy is in a peak or trough.

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Definitions:

Transfer Price

The price charged for goods and services sold between departments or subsidiaries of the same company.

Detector Division

A specialized unit within a company focused on detecting and analyzing specific types of information or signals.

Outside Customers

Individuals or entities that purchase a company's goods or services but are not part of the company itself.

Transfer Price

The fee at which services and items are traded between different sections within the same firm.