Author Question: Suppose that financial market participants now expect a future tax cut and that the yield curve is ... (Read 41 times)

elizabeth18 · **on:** Jun 30, 2018

Suppose that financial market participants now expect a future tax cut and that the yield curve is initially upward sloping. Given this information, we would expect which of the following to occur?

A) The yield curve will become steeper.
B) The yield curve will become flatter.
C) The yield curve will become horizontal.
D) The yield curve will become downward sloping.

Question 2

An increase in income will cause

A) a reduction in the supply of central bank money.
B) a reduction in the demand for currency.
C) a reduction in the demand for reserves.
D) none of the above
E) both B and C