Why might the above relationship signal a recession why, Econometrics

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Why might the above relationship signal a recession why

Suppose you observe that short-term interest rates are higher than long-term interest rates.

a. What expectations must people have regarding future interest rates?

b. Why might the above relationship signal a recession? Why might it not?

c. What will the yield curve for this problem look like?

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Econometrics: Why might the above relationship signal a recession why

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