Question

Explain why a yield curve is commonly upward sloping

Answer #1

Yield curve is plotted against the time to maturity in years and yield in percentage. That is to say, as time to maturity increases, the rate of yield increases.

This gives us the typical upward sloping yield curve. The reason for this upward slope is the result of the risk associated with yield of a larger time to maturity.

As the time to maturity increases, the risk also increases. This risk increases as there are chances of default on the debt and a higher likelihood of inflation. This risk must be compensated by a higher rate of yield on the debt issued leading to the upward sloping yield curve.

Explain why the short-run aggregate supply curve is upward
sloping.

1. Explain very thoroughly why the supply curve for labor is
upward sloping in an industry

1.How does the liquidity premium
theory explain an upward sloping yield curve during normal economic
times?

Why is the demand curve sloping downward and the
supply curve sloping upward ?
What is the difference between change in quantity demanded and
change in demand. Please high light the income effect and
substitution effect: Give an example

True/False/Explain. If the Marginal Cost curve is upward-sloping
(MC is increasing) for a certain level of output, then the Average
Variable Cost curve is also upward-sloping (AVC is increasing) for
this level of output.

Suppose there is a linear downward-sloping demand curve and a
linear upward-sloping supply curve for a good. Government
regulations increase the cost of producing gasoline while at the
same time government regulations reduce the cost of driving a
relatively inefficient sport utility vehicle (SUV). Graph the
original demand and supply curves to explain how the equilibrium
price will change?

True or False
Ricardo's constant cost production possibilities curve is
equivalent to an upward sloping supply curve
Please explain why the answer is false

The strategy of riding upward sloping yield curve
involves buying a bond with maturity lower than the investment
horizon
involves buying a bond with maturity more distant than the
investment horizon
involves buying a bond with maturity that is the same for the
investment horizon
none of the answers are correct

Assume a model with a downward-sloping aggregate demand curve
and an upward-sloping aggregate supply curve. In this model, a
decrease in aggregate supply will lead to an increase in real GDP
and a decrease in the price level.
True or False

Explain why the consumption function is upward sloping and the
investment function is horizontal. [30 marks]

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