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THE YIELD CURVE AND THE ECONOMIC INDICATION - Essay Example
Between the year 2009 and the year 2011 the U.S economy recorded an interest rate of between 0.16 and 0.06. The rate starts high at the high 0.16 percent in the year 2011 and keeps on going down to the lowest value. …
The paper goes ahead to examine the yield curve of the USA and the Australia. This paper is divided into two sections. Section a answers the task one and section be answers task two.
The economic analysis in the international world has been witnessing many fluctuations and changes over the years. To access and analyze and even predict these economic fluctuations and changes, economics have been put to task on coming up with the techniques of making economic predictions. Interest rates are factored in as one of the indicators of economic changes globally. They can therefore be for a short term and for long term as well. These interest rates changes give a good prediction on future market trend for instance a three year borrowing of a company which will be influenced by the central bank rates of borrowing and therefore being necessary to analyze the interest rates to see their input into the economy whether positively or negatively.
These interest rates basically have a very significant effect on any company or industry economically. The interest rates are never constant and these changes fluctuate from the short term interest rates to the long term interest rates. These changes are well explained in the yield curve. The yield curve is the best indicator of economic activities and it is therefore necessary to have better understanding of this for the benefit of explaining the economic trend. ...