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    Financial Markets and Institutions Study Set 7
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    Exam 3: Structure of Interest Rates
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    According to Expectations Theory, the Sudden Expectation of Lower Interest
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According to Expectations Theory, the Sudden Expectation of Lower Interest

Question 2

Question 2

Multiple Choice

According to expectations theory, the sudden expectation of lower interest rates in the future will cause investors to provide a ____ supply of short-term funds and a ____ supply of long-term funds.


A) large; large
B) large; small
C) small; small
D) small; large

Correct Answer:

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