Assume That the Current Corporate Bond Yield Curve Is Upward

question 80

Multiple Choice

Assume that the current corporate bond yield curve is upward sloping.Under this condition,then we could be sure that

• A) Inflation is expected to decline in the future.
• B) The economy is not in a recession.
• C) Long-term bonds are a better buy than short-term bonds.
• D) Maturity risk premiums could help to explain the yield curve's upward slope.
• E) Long-term interest rates are more volatile than short-term rates.

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Definitions:

Marginal Social Benefit

The extra advantage to society that comes from using an additional unit of a product or service.

Marginal Social Cost

The total cost to society of producing one additional unit of a good, including both private costs and externalities.

Pollution

The presence in or introduction into the environment of substances or things that have harmful or poisonous effects.

Marginal Social Benefit

The supplementary gain for the general population derived from the consumption of one more unit of a good or service.