Some Researchers Believe the Expectations Theory Needs to Be Modified

question 15

Multiple Choice

Some researchers believe the expectations theory needs to be modified in order to reflect

• A)liquidity premiums.
• B)that lenders may have some preference for either long- or short-term securities and hence not be indifferent between the two.
• C)the tendency of borrowers to prefer longer term securities so they don't have to issue and reissue short term securities.
• D)All of the above are true.

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Definitions:

Income Tax Schedule

A chart or table used by taxpayers to determine their tax rate based on income levels, as specified by tax law.

Average Tax Rate

The percentage of income that is paid to the government as tax, calculated by dividing the total tax amount by the total income.

Payroll Taxes

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff.

Medicare Taxes

Taxes collected in the United States to fund the Medicare program, which provides healthcare to the elderly and disabled.