Reading 23: Capital Market Expectations- LOS i～ Q1-3 policy, between, economic, following

youzizhang

 

LOS i: Evalute (1) the shape of the yield curve as an economic predictor and (2) the relationship between the yield curve and fiscal and monetary policy.

Q1. Which of the following is consistent with a steeply upwardly sloping yield curve?

A)   Monetary policy is expansive and fiscal policy is expansive.

B)   Monetary policy is expansive while fiscal policy is restrictive.

C)   Monetary policy is restrictive and fiscal policy is restrictive.

 

Q2. Which of the following is consistent with a likely weak economy in the future?

A)   Monetary policy is restrictive while fiscal policy is expansive.

B)   Monetary policy is expansive and fiscal policy is expansive.

C)   Monetary policy is restrictive and fiscal policy is restrictive.

 

Q3. Which of the following is consistent with a flat yield curve?

A)   Monetary policy is restrictive while fiscal policy is expansive.

B)   Monetary policy is restrictive and fiscal policy is restrictive.

C)   Monetary policy is expansive while fiscal policy is restrictive.

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