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Today the interest rate on a one year bond is 3% and the interest rate on a two-year bond is 2.9%. The liquidity premium on

Today the interest rate on a one year bond is 3% and the interest rate on a two-year bond is 2.9%. The liquidity premium on the two-year bond is .2%. This indicates that the market expects future short-term interest rates to ______. rise perhaps because the economy is expected to exit a recession rise perhaps because the economy is expected to enter a recession fall perhaps because the economy is expected to exit a recession fall perhaps because the economy is expected to enter a recession

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