According to the Expectations Theory of the Term Structure,the Interest

question 26

Multiple Choice

According to the expectations theory of the term structure,the interest rate on a long-term bond will equal the ________ of the short-term interest rates that people expect to occur over the life of the long-term bond.

• A)average
• B)sum
• C)difference
• D)multiple

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Definitions:

Adverse Supply Shock

An Adverse Supply Shock is an unexpected event that reduces supply, leading to higher prices and lower quantities of goods available.

Internet Usage

Refers to the various activities and tasks performed by individuals or organizations over the internet, including communication, information search, entertainment, and e-commerce.

Favorable Supply Shock

An unexpected event that increases the supply of a good or service, leading to a lower price and benefitting consumers.

Natural Rate

The rate of unemployment when the labor market is in equilibrium, reflecting the number of people who are jobless due to the natural turnover in the workforce.