Which of the following statements is most correct?

	The establishment of the Federal Reserve System has caused the yield curve to always be upward sloping
	A downward sloping yield curve implies that government securities with long-term maturities have lower interest rates relative to similar quality securities with short-term maturities.
	A decline in interest rates for long-term Treasury securities indicates an increase in investor long-run inflation expectations.
	A downward sloping yield curve implies that government securities with long-term maturities have lower interest rates relative to similar quality securities with short-term maturities.

Economists who believe that long-run inflationary bias will continue base their belief on which of the following factors:

	Prices and wages tend to decrease during periods of boom in a competitive economy; this tendency is reinforced by wage contracts that provide escalator clauses to keep wages in line with prices and by wage increases that are sometimes greater than increases in productivity.
	The tendency of large corporations to rely on non-price competition (advertising, and style and color changes) and to reduce output makes prices drop
	During recessions, prices tend to rise rather than decrease because major unions have long-run contracts calling for annual wage increases no matter what economic conditions are at the time.
	If prices decline drastically in a field, the government is likely to step in with programs to help take excess supplies off the market.