According to the segmented markets theory of the term structure
A) bonds of one maturity are close substitutes for bonds of other maturities, therefore, interest rates on bonds of different maturities move together over time.
B) the interest rate for each maturity bond is determined by supply and demand for that maturity bond.
C) investors' strong preferences for short-term relative to long-term bonds explains why yield curves typically slope downward.
D) because of the positive term premium, the yield curve will not be observed to be downward-sloping.
B
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If the dollar depreciates, the U.S. AD curve shifts _______________, the U.S. SRAS curve shifts __________________, and the price level will _________________________
A) rightward; leftward; increase B) rightward; leftward; decrease C) leftward; rightward; increase D) leftward; rightward; decrease
H. Ross Perot's famous claim in 1992 that the North American Free Trade Agreement (NAFTA) would cause a "great sucking sound" referred to
A. a rapid increase in U.S. exports to Mexico. B. a huge increase in foreign direct investment in the United States. C. a rapid increase in the wage inequality in Mexico. D. an instant shift of jobs from the United States to the Mexico.
A consumer's budget set includes all affordable combinations of two goods.
Answer the following statement true (T) or false (F)
Investment is a flow of resources into the production of new capital
a. True b. False Indicate whether the statement is true or false