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If the next chair of the Federal Reserve Board has a reputation for advocating an even slower rate of money growth than the current chair,
If the next chair of the Federal Reserve Board has a reputation for advocating an even slower rate of money growth than the current chair, what will happen to interest rates? Discuss the possible resulting situations. How might a sudden increase in people's expectations of future real estate prices affect interest rates? Assuming that the expectations theory is the correct theory of the term structure, calculate the interest rates in the term structure for maturities of one to five years, and plot the resulting yield curves for the following paths of one-year interest rates over the next five years: a. 5%,6%,7%,6%,5% b. 5%, 4%,3%,4%,5% How would you yield curves change if people preferred shorter-term bonds over long-term bonds
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