Generally, long-term loans have higher interest rates than short-term loans because of
A) the general expectation of higher future rates of inflation.
B) lender preferences for shorter-term, more liquid loans.
C) greater demand for long-term rather than short-term loans relative to the supply of such loans.
D) all of the above.

Question

Quizplus · Accepted Answer

Long-term loans typically have higher interest rates due to the expectation of higher future inflation, lenders' preference for liquidity, and greater demand relative to supply for long-term loans.

Generally, Long-Term Loans Have Higher Interest Rates Than Short-Term Loans