In July 2023, the one-year treasury rate is around 5.4%. However, 10-year interest rate is only 3.9%, indicating an inverted yields curve. In the history, yields curves are inverted before recessions. Use liquidity premium theory to explain why yields curve is inverted before recessions.
In July 2023, the one-year treasury rate is around 5.4%. However, 10-year interest rate is only 3.9%, indicating an inverted yields curve. In the history, yields curves are inverted before recessions. Use liquidity premium theory to explain why yields curve is inverted before recessions.
Chapter1: Making Economics Decisions
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Transcribed Image Text:In July 2023, the one-year treasury rate is around 5.4%. However, 10-year interest rate is only 3.9%, indicating an inverted
yields curve. In the history, yields curves are inverted before recessions. Use liquidity premium theory to explain why yields
curve is inverted before recessions.
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