Suppose individuals expect an increase in future taxes. Explain what effect this expected increase in future taxes will have on the yield curve (in terms of a one- year rate and a two- year rate) and on stock prices in the current period.

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The Answer of Suppose individuals expect an increase in future taxes. Explain what effect this expected increase in future taxes will have on the yield curve (in terms of a one- year rate and a two- year rate) and on stock prices in the current period.

Suppose Individuals Expect an Increase in Future Taxes