In an Effort to Maintain Price Stability,it Is Expected That

question 66

Multiple Choice

In an effort to maintain price stability,it is expected that the European Central Bank will raise interest rates in the future.Which of the following is the most likely effect of such an action on short- and long-term interest rates in Europe?

• A)Long-term interest rates will tend to be higher than short-term interest rates.
• B)Long-term interest rates will be about the same as short-term interest rates.
• C)Both long- and short-term interest rates would be expected to fall sharply.
• D)No relative change in short- and long-term interest rates could be predicted.
• E)Long-term interest rates will tend to be lower than short-term interest rates.

---

Definitions:

Conspiracy

A secret plan by a group to do something unlawful or harmful, or the belief in such secret schemes.

Product

An item, service, or idea offered to the market for consumption, use, or acquisition.

Sherman Act

A landmark federal statute in the U.S. antitrust law prohibiting monopolistic and anti-competitive practices.

Price Fixing

An illegal agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain market conditions so the price remains at a given level.