Assume That the Current Yield Curve Is Upward Sloping or Normal

question 50

Multiple Choice

Assume that the current yield curve is upward sloping or normal. This implies that:

• A)short-term interest rates are more volatile than long-term rates.
• B)inflation is expected to subside in the future.
• C)the economy is at the trough of a business cycle.
• D)long-term bonds are less attractive to investors than short-term bonds.
• E)short-term interest rates are lower than the long-term interest rates.

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Definitions:

Taste-For-Discrimination Model

A theoretical model that explains how discrimination can affect economic decisions and outcomes by assuming some agents have a 'taste' or preference for discriminating against certain groups.

Wages

Compensation given to employees for their work, often determined by the hour, day, or by the amount of work completed.

Labor Force

The labor force comprises all the working-age population that is either employed or actively seeking employment.

Discrimination

Unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or sex.