When Investors Believe That Inflation Is Going to Decline in the Future

question 282

Multiple Choice

When investors believe that inflation is going to decline in the future the term structure of interest rates will:

• A) Be humped.
• B) Rise at an increasing rate over a period of time.
• C) Rise in a linear manner over a period of time.
• D) Be higher in the long term than in the short term.
• E) Decrease as the time to maturity gets longer.