Suppose the yield curve is initially horizontal. Suppose the current one-year interest rate increases by 4% while the expected future one-year interest rate does not change. Which of the following will tend to occur?
A) i2t will increase by 4%
B) i2t will increase by 2%
C) i2t will increase by less than 2%
D) i2t will decrease by 2%
B
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Is $1,000 received today worth as much as $1,000 received one year from now? Explain your answer
What will be an ideal response?
Firms that are designated as systemically important financial institutions (SIFIs) are subject to all of the following additional Federal Reserve regulations EXCEPT
A) higher capital standards. B) stricter liquidity requirements. C) providing a plan for orderly liquidation if necessary. D) interest rate ceilings on time deposits.
A firm that produces chemical solvents creates some air pollution because of the emissions from its manufacturing facilities. A tax is imposed on the firm, equal to the costs of environmental damage caused by a unit of the emissions
What is the result? A) The quantity of chemical solvents produced now will be the efficient amount. B) Demand for the chemical solvents will increase. C) Demand for the chemical solvents will decrease. D) Consumers of the chemical solvents will be willing to pay the full amount of the tax, and so the quantity produced will be unaffected.
The mathematical result showing that, under certain assumptions, there is no scheme for aggregating individual preferences into a valid set of social preferences is called