A yield curve generally slopes upward but may slope downward if short-term interest rates on bonds are higher than longer-term interest rates.

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Quizplus · Accepted Answer

The yield curve typically slopes upward, reflecting higher yields for longer-term investments due to the risks and uncertainties over a longer period. However, it can slope downward (inverted yield curve) when short-term interest rates are higher than long-term rates, often seen as a predictor of economic recession.

A Yield Curve Generally Slopes Upward but May Slope Downward