The Term Structure of Interest Rates

question 36

Multiple Choice

The term structure of interest rates

• A) is not an indication of investors' expectations about inflation and future interest rates.
• B) will be upward sloping if short-term interest rates are higher than long-term rates.
• C) will be downward sloping under normal conditions.
• D) none of the other answers are correct

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Definitions:

Day

A period of 24 hours as a unit of time, representing the time taken by the Earth to complete one rotation with respect to the sun.

Utility

Refers to the total satisfaction received from consuming a good or service.

Consuming

The act of using goods and services to satisfy needs or wants.

Maximizing Utility

The process of choosing the most satisfying option among available choices based on preferences and constraints.