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2. Looking at the January 2020 yield curve, which of the following is true? a Investors expect an increase in the interest rate by the Fed since the curve is upward-sloping in the long run b Investors don't expect any change in interest rates by the Fed since the yield curve is flat in the short run c Investors expect the Fed to cut interest rates so that inflation is higher in the longer run d Investors expect the Fed to increase interest rates to increase real growth rate in the long run e None of the above 3. Comparing the yield curve of January 2019 and July 2019, what happened to the investors' expectation of real growth rate (r) and inflation rate ( ª) in the near future?

2. Looking at the January 2020 yield curve, which of the following is true? a Investors expect an increase in the interest rate by the Fed since the curve is upward-sloping in the long run b Investors don't expect any change in interest rates by the Fed since the yield curve is flat in the short run c Investors expect the Fed to cut interest rates so that inflation is higher in the longer run d Investors expect the Fed to increase interest rates to increase real growth rate in the long run e None of the above 3. Comparing the yield curve of January 2019 and July 2019, what happened to the investors' expectation of real growth rate (r) and inflation rate ( ª) in the near future?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please provide the answer and explanation for part 2 and 3

3.5 3 2.5 2.21 2 15 1 0.5 0 1M 3M 7/18/2019 1/9/2020 6M 1Y 2Y 3Y SY Use the above graph to answer the next 3 questions: 7Y 10Y 1/17/19 20Y 2.03. 1.85 1.55 30Y 1. What was the yield spread between the 3-month and the 10-year Treasury in January 2020 equal to? 2. Looking at the January 2020 yield curve, which of the following is true? a Investors expect an increase in the interest rate by the Fed since the curve is upward-sloping in the long run b Investors don't expect any change in interest rates by the Fed since the yield curve is flat in the short run c Investors expect the Fed to cut interest rates so that inflation is higher in the longer run d Investors expect the Fed to increase interest rates to increase real growth rate in the long run e None of the above 3. Comparing the yield curve of January 2019 and July 2019, what happened to the investors' expectation of real growth rate (r) and inflation rate () in the near future?
Transcribed Image Text:3.5 3 2.5 2.21 2 15 1 0.5 0 1M 3M 7/18/2019 1/9/2020 6M 1Y 2Y 3Y SY Use the above graph to answer the next 3 questions: 7Y 10Y 1/17/19 20Y 2.03. 1.85 1.55 30Y 1. What was the yield spread between the 3-month and the 10-year Treasury in January 2020 equal to? 2. Looking at the January 2020 yield curve, which of the following is true? a Investors expect an increase in the interest rate by the Fed since the curve is upward-sloping in the long run b Investors don't expect any change in interest rates by the Fed since the yield curve is flat in the short run c Investors expect the Fed to cut interest rates so that inflation is higher in the longer run d Investors expect the Fed to increase interest rates to increase real growth rate in the long run e None of the above 3. Comparing the yield curve of January 2019 and July 2019, what happened to the investors' expectation of real growth rate (r) and inflation rate () in the near future?
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