Question

During tight money periods, generally Multiple Choice short-term rates are equal to long-term rates. short-term rates are higher than long-term rates. the relationship between short- and long-term rates remains unchanged. long-term rates are higher than short-term rates.

Answer 1

The thing which usually happens during tight money periods, generally is:

• short-term rates are higher than long-term rates.

What is a Tight Money Period?

This refers to an economic policy in which there is the need for control of inflation in the economy by the financial institution in a country.

With this in mind, we can see that when this happens in the tight money periods, there is usually short term rates which are higher than long term rates because there is a need to control the economy which is rising too quickly.

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