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Pandemic has caused higher unemployment rate and lower growth in GDP. Federal Reserve wants to buy more 1-year and 10-year Treasury securities and sell 5-year
Pandemic has caused higher unemployment rate and lower growth in GDP. Federal Reserve wants to buy more 1-year and 10-year Treasury securities and sell 5-year Treasury securities to stimulate the economy. What would be shape of Treasury yield curve as a result of this move by Fed? Explain this yield curve using appropriate theory of term structure.
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