Suppose that the yield curve shows that the one-year bond yield is 2 percent, the two-year yield is 3 percent, and the three-year yield is 4 percent. assume that the risk premium on the one-year bond is zero, the risk premium on the two-year bond is 1 percent, and the risk premium on the three-year bond is 2 percent. a. what are the expected one-year interest rates next year and the following year? the expected one-year interest rate next year = 2 % the expected one-year interest rate the following year = 4 % b. if the risk premiums were all zero, as in the expectetions hypothesis, what would the slope of the yield curve be? the slope of the yield curve would be

Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. the economist proposes the following relationship: p=a x m - p=price level - m=money supply - a=a composite of other factors, including real gdp, that change very slowly over time. how might an economist gather empirical data to test the proposed relationship between money and the price level? an economist would persuade the federal reserve to change the money supply to various levels, and observe the resulting changes in the price level. unlike researchers in the hard sciences, economists cannot study complex relationships using data. economists do not usually develop theoretical models of the economy but only analyze summary statistics about the current state of the economy. an economist would look for data on past changes in the money supply, and note the resulting changes in the price level

True or false: a fitted model with more predictors will necessarily have a lower training set error than a model with fewer predictors.

Pederson company reported the following: manufacturing costs $480,000 units manufactured 8,000 units sold 7,500 units sold for $90 per unit beginning inventory 2,000 units what is the average manufacturing cost per unit? (round the answer to the nearest dollar.)