The Existence of an Upward Sloping Yield Curve Proves That

question 2

True/False

The existence of an upward sloping yield curve proves that the liquidity preference theory is correct,because an upward sloping curve necessarily implies that firms must offer a maturity risk premium in order to induce investors to lend for longer periods.

---

Definitions:

Trade Pact

is an agreement between two or more nations regarding the conditions of trade between them, often aiming to reduce barriers and increase trade.

Mexico

A country located in the southern part of North America, known for its rich cultural heritage, diverse landscapes, and as the 11th most populous country in the world.

Japan

An island country located in East Asia, known for its rich cultural heritage, advanced technology, and strong economy.

European Union

is a political and economic union of 27 European countries that are bound together by various treaties aimed at enhancing economic cooperation, free movement, and common external policies.