When Yield Curves Are Downward Sloping

question 112

Multiple Choice

When yield curves are downward sloping

• A)long-term interest rates are above short-term interest rates.
• B)short-term interest rates are above long-term interest rates.
• C)short-term interest rates are about the same as long-term interest rates.
• D)medium-term interest rates are above both short-term and long-term interest rates.

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Definitions:

Independent Pricing

A pricing strategy where prices are set based on internal considerations or costs rather than being influenced by competitors or market prices.

Diagram

A graphical representation used to illustrate relationships, data, or processes in a clear and concise manner.

Duopoly Game

A market structure characterized by two firms controlling the majority of the market share, often analyzed in game theory to predict outcomes.

Collusion

A secretive agreement between parties to cooperate for fraudulent, illegal, or deceitful purposes, often noted in economics as companies conspiring to fix prices or manipulate market conditions.