Suppose that a firm is facing an upward-sloping yield curve and needs to borrow money to invest in production. Does this mean that the firm should consider borrowing only at short-term rates?A. Yes, using short term financing will give the firm the lowest possible interest rate over the life of the project. B. No, the firm needs to take the volitility of short term rates into account. C. No, an upward sloping yield curve means that the firm will get a lower interest rate if it uses long term financing.

The answer is B:

No, the firm needs to take the volatility of short term rates into account.

Explanation:

Upward slopping yield curve is the most common shape of yield curve. An upward slopping yield curve indicates that the financial markets have the expectations of short-term interest rates rising in the near future. Therefore, it is recommended to take the volatility of short term rates rising into account.

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.