Suppose the economy has an inverted yield curve. According to the liquidity premium theory, which of the following interpretations could be used to explain this?
A. The term spread has increased.
B. Investors are indifferent between bonds with different time horizons.
C. Interest rates are expected to rise in the future.
D. Investors expect an economic slowdown.
Answer: D
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The law of demand illustrates that as
a. price decreases, demand increases. b. price increases, quantity demanded increases. c. price decreases, quantity supplied increases. d. price decreases, quantity demanded increases.
Investment is an economic term for the act of increasing the stock of money available for business loans
a. True b. False Indicate whether the statement is true or false
Equilibrium in the market is where supply is equal to demand.
A. True B. False C. Uncertain
Answer the next question on the basis of the following table for a commercial bank or thrift:(1)(2)(3)Legal Reserve Ratio (%)Checkable DepositsActual Reserves10$40,000$10,0002040,00010,0002540,00010,0003040,00010,000Refer to the above table. When the legal reserve ratio is 20 percent, the money-creating potential of the entire banking system is:
A. $8,000. B. $10,000. C. $4,000. D. $6,000.