The economy enters a period of robust economic growth that is expected to last for several years

Finance Dec 23, 2020

The economy enters a period of robust economic growth that is expected to last for several years. How would this be reflected in the risk structure of interest rates?

a) an inverted yield curve

b) a decrease in the term spread

c) an increase in yields on tax-exempt bonds.

d) a decrease in the interest rate spread

Expert Solution

The economy enters a period of robust economic growth that is expected to last for several years, it is reflected as a decrease in the interest rate spread

option d is correct.

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