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Author Question: Suppose the yield curve is upward sloping. How should one interpret this particular yield curve? ... (Read 67 times)

acc299

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on: Jun 30, 2018
Suppose the yield curve is upward sloping. How should one interpret this particular yield curve?
 
  What will be an ideal response?

Question 2

The demand for money is given by Md = Y (0.3 - i), where Y = 120 and the supply of money is 30. a. What is the equilibrium interest rate? b. If the central bank wants to decrease i by 2, at what level should it set the supply of money?
 
  What will be an ideal response?


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C.mcnichol98

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Upward sloping yield curve implies that the future expected one-year rate is higher than the current one-year rate.

Answer to Question 2

a. i = 5.
b. Ms = 32.4.


acc299

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Reply #2 on: Jun 30, 2018
Thank you


C.mcnichol98

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Reply #3 on: Jun 30, 2018
No problemo


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