Question

29) True or False: Due to the coronavirus threat, the US government eliminates payroll taxes temporarily. The hope is that people's paychecks will be bigger, and this will lead them to shop and spend more, thus lessening the effect of the coronavirus shock on the economy and financial markets. All things being equal, we should expect interest rates to rise.

30) True or False: A good working description is to say, the yield curve often inverts before recessions, although sometimes inversions happen without a subsequent recession.

Answer 1

29) FALSE - Us government has not cut the payroll taxes and All things being equal, we should expect interest rates to Fall due to coronavirus threat. FED will cut the interest rates in order to stimulate demand in the economy which has slowed down.

30) TRUE- The yield curve often inverts before recessions as yield curve inversions are seen as a leading indicator for recession, . The yield curve inverse sometimes without a subsequent recesssion, But overall we shouls see it as a warning signal.