According to the Expectations Theory, If the Market Believes That

question 82

Multiple Choice

According to the expectations theory, if the market believes that interest rates are likely to increase in the near future, it would lead to

• A) an increase in the demand for short-term securities.
• B) an increase in the demand for long-term securities.
• C) a decrease in the supply of short-term securities.
• D) an increase in the supply of long-term securities.

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