Long-Term Interest Rates Are Higher Than Short-Term Rates

question 141

Multiple Choice

Long-term interest rates are higher than short-term rates. This reflects a belief that:

• A) short-term rates will fall.
• B) short-term rates will rise.
• C) short-term rates will remain the same.
• D) the Federal Reserve is undergoing a change in policy.

Recognize the implications of market changes on industry equilibrium, including entry and exit of firms.

Understand the relationship between market stability, efficiency, and equity.

Understand the concept of Pareto efficiency and its application to voluntary exchanges.

Analyze the conditions under which a policy or action can be considered potentially efficient.