Suppose the Economy Has an Inverted Yield Curve

question 98

Multiple Choice

Suppose the economy has an inverted yield curve.According to the Expectations Hypothesis, which of the following interpretations could be used to explain this?

• A)Interest rates are expected to fall in the future.
• B)Investors prefer bonds with less default risk.
• C)Investors prefer bonds with less interest-rate risk.
• D)The term spread is positive.

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Definitions:

Infatuation

An intense but short-lived passion or admiration for someone or something.

Passionate Relationship

A romantic relationship characterized by intense emotions and sexual attraction.

Companionate

Relating to or denoting a type of love characterized by deep affection and commitment.

Approachability Cues

Nonverbal signs or behaviors that indicate a person is open to interaction or conversation.