Which of the Following Statements Is CORRECT

question 76

Multiple Choice

Which of the following statements is CORRECT?

• A) Downward sloping yield curves are inconsistent with the expectations theory.
• B) The actual shape of the yield curve depends only on expectations about future inflation.
• C) If the pure expectations theory is correct,a downward sloping yield curve indicates that interest rates are expected to decline in the future.
• D) If the yield curve is upward sloping,the maturity risk premium must be positive and the inflation rate must be zero.
• E) Yield curves must be either upward or downward sloping - they cannot first rise and then decline.

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Definitions:

Gibbons V. Ogden

A landmark Supreme Court case in 1824 that clarified the federal government's power over interstate commerce, ruling in favor of a broad interpretation of the U.S. Constitution's Commerce Clause.

Commerce Clause

A provision in the United States Constitution granting Congress the power to regulate commerce with foreign nations, among the several states, and with Native American tribes.

Congress's Power

The range of legislative authorities granted to the Congress by the Constitution, including making laws, declaring war, and controlling federal spending.

Northern Artisans

Skilled workers from the northern regions who specialized in handmade goods, playing a crucial role in the local economies and communities before industrialization.