Long-term interest rates and short-term interest rates:
A) usually move in lockstep.
B) always move closely together.
C) don't always move closely together.
D) are independent of one another.

Question

Quizplus · Accepted Answer

Long-term interest rates and short-term interest rates don't always move closely together. While they are both influenced by similar economic factors such as inflation, monetary policy, and economic growth, they can diverge based on market expectations and investor behavior. For example, if there is a higher demand for long-term investments, long-term interest rates may not rise as quickly as short-term interest rates. Additionally, long-term interest rates may be more sensitive to factors such as geopolitical events and global economic trends.

Long-Term Interest Rates and Short-Term Interest Rates