How Do Trends in Bond Interest Rates Help Predict Changes

question 121

Multiple Choice

How do trends in bond interest rates help predict changes in the business cycle?

• A) When long-term rates are higher than short-term rates, a recession is likely.
• B) When long-term rates are lower than short-term rates, a recession is likely.
• C) When long-term rates are higher than short-term rates, a trough is present.
• D) When long-term rates are lower than short-term rates, an expansion is likely.

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