The Theory of the Term Structure of Interest Rates, Which

question 58

Multiple Choice

The theory of the term structure of interest rates, which suggests that long-term rates are determined by the average of short-term rates expected over the time that a long-term bond is outstanding, is the

• A) expectations hypothesis.
• B) segmentation theory.
• C) liquidity premium theory.
• D) market average rate theory.

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Definitions:

World War II

A worldwide war that spanned from 1939 to 1945, engaging the majority of the planet's countries, with every major power eventually aligning into two adversarial military blocs: the Allies versus the Axis.

Urbanized Industrial

Characterized by the growth of cities and the development of manufacturing and services, leading to a shift from agricultural-based economies.

Extractive Economy

An economic model that focuses on the extraction of natural resources for export, often associated with colonial and developing nations.

McCarran Act

also known as the Internal Security Act of 1950, is a United States federal law that required Communist organizations to register with the U.S. Attorney General and established the Subversive Activities Control Board.