20. In actual practice, short-term interest rates and long-term interest rates usually move together; this isthe main weakness ofA) segmented markets theory.B) expectations theory.C) liquidity premium theory.D) separable markets theory.21. An unexpected decrease in the price level increases the debt burden on the borrower company butdoes not increase the real value of the lender company's assets. The result of this condition isA) the real net worth of the lenders' firms declines.B) adverse selection and moral hazard problems are reduced.C) increase in real net worth from the perspective of the borrower company.D) increase in lending.

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20. In actual practice, short-term interest rates and long-term interest rates usually move together; this is the main weakness of A) segmented markets theory. B) expectations theory. C) liquidity premium theory. D) separable markets theory.

20. In actual practice, short-term interest rates and long-term interest rates usually move together; this is the main weakness of A) segmented markets theory. B) expectations theory. C) liquidity premium theory. D) separable markets theory.

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

20. In actual practice, short-term interest rates and long-term interest rates usually move together; this is
the main weakness of
A) segmented markets theory.
B) expectations theory.
C) liquidity premium theory.
D) separable markets theory.
21. An unexpected decrease in the price level increases the debt burden on the borrower company but
does not increase the real value of the lender company's assets. The result of this condition is
A) the real net worth of the lenders' firms declines.
B) adverse selection and moral hazard problems are reduced.
C) increase in real net worth from the perspective of the borrower company.
D) increase in lending.

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