When the U

question 22

Multiple Choice

When the U.S.decides to strengthen its border control,the labor market in California is affected.We would expect the:

• A) demand for labor to decrease.
• B) supply of labor to decrease.
• C) demand of labor to increase.
• D) supply of labor to increase.

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Definitions:

Expectations Theory

A theory suggesting that the interest rates on long-term bonds will reflect expected future short-term rates.

Forward Rates

The interest rates implied by current zero-coupon bond prices for periods in the future.

Future Short Interest Rate

An estimation or prediction of the interest rates at a future point in time, often used in the valuation of interest rate derivatives.

Stripped Treasuries

Stripped Treasuries are US Treasury securities whose principal and interest payments have been separated to create two new securities, allowing investors to hold and trade the components separately.