When Referring to a "Downward Sloping" Yield Curve

question 40

Multiple Choice

When referring to a "downward sloping" yield curve:

• A) as maturities shorten, interest rates decline
• B) as maturities shorten, interest rates rise
• C) as maturities lengthen, interest rates remain the same
• D) as maturities lengthen, interest rates rise

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Definitions:

Adam Smith

An 18th-century Scottish economist known as the father of modern economics, best remembered for his theory of the invisible hand.

Wealth Of Nations

A seminal book by Adam Smith, published in 1776, that discusses what builds nations’ wealth, emphasizing the importance of a free market economy.

Virtues

Moral excellence and righteousness; qualities of character that are deemed to be morally good or desirable in a person.

Market System

In this economic order, the strategies for investment, production, and merchandise distribution are dictated by supply and demand trends, with a free-market policy guiding the pricing of all goods and services.