Which of the Following Statements Is CORRECT

question 81

Multiple Choice

Which of the following statements is CORRECT?

• A) If inflation is expected to increase in the future,and if the maturity risk premium (MRP)is greater than zero,then the Treasury yield curve will have an upward slope.
• B) If the maturity risk premium (MRP)is greater than zero,then the yield curve must have an upward slope.
• C) Because long-term bonds are riskier than short-term bonds,yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds.
• D) If the maturity risk premium (MRP)equals zero,the yield curve must be flat.
• E) The yield curve can never be downward sloping.

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Definitions:

Government Expenditures

The total amount of money spent by the government within a specific period, including spending on goods, services, and public projects.

Government Expenditures

The total amount of spending by the government for its operations, public services, and the acquisition of goods and services.

Market Equilibrium

The state in which market supply and demand balance each other, resulting in stable prices.

Deadweight Loss

The loss of total social surplus that occurs when the market outcome is not efficiently allocated, typically due to market failures or interventions.