When Long-Term Interest Rates Are Higher Than Short-Term Rates, as They

question 293

Multiple Choice

When long-term interest rates are higher than short-term rates, as they were in 2010:

• A)it implies that short-term interest rates are expected to fall.
• B)it has no implication for short-term interest rates.
• C)it implies that inflation will fall.
• D)it implies that short-term interest rates are expected to rise.

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