According to the expectations theory, what will be the interest rate on a three-year bond if a one-year bond has an interest rate of 2% and is expected to have an interest rate of 3% next year and 5% in two year?
Report your answer using a percentage with two decimal places.
The interest rate on a three-year bond will equal (2 + 3 + 5 )/3 = 3.33%.
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Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12.50 and if Archibald's does not shut down, what is the firm's profit-maximizing output?
A) 2 tattoos per hour B) 3 tattoos per hour C) 4 tattoos per hour D) 5 tattoos per hour
Refer to the figure above. If the relative price of T were to increase, then the price line would
A) shift out in a parallel fashion. B) shift in a parallel fashion. C) become steeper. D) become flatter.
If a unit excise tax is placed on a good for which the demand is very unresponsive to a price change, then
A) the government generally pays the majority of the tax. B) the consumers generally pay the majority of the tax. C) the producers generally pay the majority of the tax. D) producers and consumers pay equal portions of the tax.
"Crowding in" refers to federal government deficits:
a. which reduce future rates of economic growth. b. used for public infrastructure will offset any decline in business investment. c. All of the answers are correct. d. which reduce private business and consumption spending.