Explain what the term structure of interest rates represents
What will be an ideal response?
The term structure of interest rates illustrates the relationship between the yield to maturity on bonds (with the same risk characteristics) and maturity.
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When the CPI rises ________, the inflation rate is ________
A) rapidly; low B) rapidly; high C) steadily; zero D) slowly; high E) rapidly; either high, low, or zero depending on whether production of output is increasing, decreasing, or not changing.
A monopolistic competitor behaving in a profit-maximizing way will
A) not advertise. B) advertise as much as it can in order to increase its sales. C) advertise to the point where the additional sales from advertising equal the additional marginal costs of the product. D) advertise to the point where the additional revenue from one more dollar of advertising just equals the extra dollar cost of advertising.
The marginal factor cost of a monopsonist is
A) upward sloping and the same as the supply curve. B) downward sloping when the supply curve of labor is upward sloping. C) upward sloping and rises faster than the supply curve. D) horizontal.
Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________
A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase