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When Long-Term Interest Rates Are Higher Than Short-Term Rates, as They

Question 293

Multiple Choice

When long-term interest rates are higher than short-term rates, as they were in 2010:


A) it implies that short-term interest rates are expected to fall.
B) it has no implication for short-term interest rates.
C) it implies that inflation will fall.
D) it implies that short-term interest rates are expected to rise.

Correct Answer:

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