When the yield curve is downward-sloping,
A)short-term yields are higher than long-term yields.
B)long-term yields are higher than short-term yields.
C)the bond market is anticipating the U.S. Treasury may default on its obligations.
D)the inflation rate is expected to rise.

Question

Quizplus · Accepted Answer

A downward-sloping yield curve indicates that short-term yields are higher than long-term yields, which can signal expectations of lower interest rates or economic slowdown in the future.

When the Yield Curve Is Downward-Sloping