In an Effort to Maintain Price Stability, It Is Expected

question 92

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

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Definitions:

Hold on the South

A phrase indicating a strong influence or control over the southern United States, often used in historical contexts such as politics or social norms.

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An American military officer who served during the Revolutionary War before defecting to the British side in 1780.

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A historic fort in New York that played a strategic role in the American Revolutionary War after being captured by American forces in 1775.

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A natural freshwater lake in North America, mainly within the borders of the United States (Vermont and New York) but partially situated in Canada, known for its recreational value and historical significance.