Which Statement Explains Why the Size and the Direction of the Gap

question 76

Multiple Choice

Which statement explains why the size and the direction of the gap between long- and short-term interest rates is a predictor of stages in the business cycle?

• A) The time period with higher rates is likely to have higher economic activity than the time period with lower rates.
• B) The time period with higher rates is likely to have slower economic activity than the time period with lower rates.
• C) When the rates are unequal, the economy is in expansion or contraction; when the rates are equal, the economy is in a peak or trough.
• D) When the rates are equal, the economy is in expansion or contraction; when the rates are unequal, the economy is in a peak or trough.

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Definitions:

Verbal Communication

The conveyance of information or feelings through spoken words, encompassing elements like language, tone, and inflection for effective interaction.

Straightforward

Direct and clear, without unnecessary complexity or ambiguity.

"I" Message

A communication technique that focuses on the speaker's feelings and perspectives rather than placing blame, intended to reduce defensiveness in conversations.

Specific Behavior

A particular way of acting or conducting oneself that is identifiable and distinct.