The Liquidity Preference Theory Suggests That Long-Term Interest Rates Tend

question 140

True/False

The liquidity preference theory suggests that long-term interest rates tend to be higher than short-term rates (and therefore the yield curve slopes up)due to the lower liquidity and higher responsiveness to general interest rate movements of longer-term securities.

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Definitions:

Zimmermann Telegram

A secret diplomatic communication issued from the German Foreign Office in January 1917 that proposed a military alliance between Germany and Mexico in the event of the United States entering World War I against Germany.

Mexican Americans

Americans of Mexican descent, residing in the United States, with a diverse heritage that includes indigenous, European, and African ancestry.

Sabotage

Deliberate actions aimed at damaging, disrupting, or undermining the operations, plans, or success of opponents or enemy forces.

Proclamation of Neutrality

A declaration made by President George Washington in 1793, asserting that the United States would remain neutral in the conflict between France and Great Britain.