1. Why is the yield curve a leading economic indicator?
A. The yield curve can invert, meaning long-term rates are lower than short-term rates, indicating sophisticated investors feel rate cuts are coming, signaling changes to come.
B. The yield curve is shaped like a pillow, with all points concave to rising rates.
C. The yield curve leans into the future with its stated rates 30 years forward.
D. The yield curve is in fact not a leading economic indicator.
2. What monetary and fiscal policies might be prescribed for an economy in deep recession?
A. stop selling US Treasuries and raise taxes to balance the budget and pay of national debt
B. lower interest rates and lower taxes, and higher government spending
C. lower government spending and higher rates of interest