If Inflation Becomes Expected, and All Other Things Remain as They

question 119

Multiple Choice

If inflation becomes expected, and all other things remain as they were, the yield curve would most likely become:

• A)steeper.
• B)flatter
• C)flat.
• D)vertical.

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Definitions:

Prepaid Asset

Expenses paid in advance and recorded as assets before they are used or consumed.

Pre-Tax Book Income

The income of a company before taxes as reported in its financial statements, according to accounting principles.

Taxable Income

Income on which tax must be paid. Total income minus exemptions and deductions is used to calculate this figure.

Income Tax Expense

The amount of expense recognized in a given period for taxes on profits, reflecting the expected cash outflow to tax entities.