Economists' Attempts to Explain the Term Structure of Interest Rates

question 62

Multiple Choice

Economists' attempts to explain the term structure of interest rates

• A)illustrate how economists modify theories to improve them when they are inconsistent with the empirical evidence.
• B)illustrate how economists continue to accept theories that fail to explain observed behavior of interest rate movements.
• C)prove that the real world is a special case that tends to get short shrift in theoretical models.
• D)have proved entirely unsatisfactory to date.

---

Definitions:

Fiscal Year

A twelve-month period used for accounting purposes to prepare financial statements, which may or may not align with the calendar year.

Calendar Year

A one-year period that begins on January 1 and ends on December 31, used for most financial and tax reporting purposes.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including a balance sheet, income statement, and cash flow statement.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.