What impact should an economic slowdown have on the risk structure of interest rates?
What will be an ideal response?
An economic slowdown should increase the risk premium on privately issued bonds since some firms may find it increasingly difficult to meet their financial obligations. It is important to note, however, that a slowdown or recession does not affect the risk of holding government bonds, which is why the risk spread increases for private bonds.
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Present and explain the Fundamental Equation of the Monetary Approach
What will be an ideal response?
When a teacher in a private school points out to her high school principal that since there are empty seats in all classrooms, the cost of additional students is really zero, she is using the
a. law of comparative advantage. b. principle of marginal analysis. c. theory of externalities. d. notion of the cost decreases of the service sector. e. concept of opportunity cost.
Refer to the accompanying table. If the price of a t-shirt is $6 and the price of a sweater is $80, then the rational spending rule is satisfied when the consumer purchases ________ t-shirts and ________ sweaters. UnitsUtils Per Year from T-shirtsUtils Per Year from Sweaters0001754002135720318096042101120
A. 4; 4 B. 3; 4 C. 4; 3 D. 4; 1
A change in income leads to a ________ that causes a ________.
A. change in quantity demanded; shift of the demand curve B. change in quantity demanded; movement along the demand curve C. change in demand; movement along the demand curve D. change in demand; shift of the demand curve