Use the following figure to answer the question :
-The mound-shaped yield curve in the figure above indicates that short-term interest rates are expected to
A)rise in the near-term and fall later on.
B)fall moderately in the near-term and rise later on.
C)fall sharply in the near-term and rise later on.
D)remain unchanged in the near-term and fall later on.

Question

Use the following figure to answer the question : 
-The mound-shaped yield curve in the figure above indicates that short-term interest rates are expected to
A)rise in the near-term and fall later on. 
B)fall moderately in the near-term and rise later on. 
C)fall sharply in the near-term and rise later on. 
D)remain unchanged in the near-term and fall later on.

Quizplus · Accepted Answer

A mound-shaped yield curve suggests that short-term interest rates are expected to rise in the near term and then fall later on. This is because the curve starts low, peaks in the middle, and then declines, indicating an initial increase followed by a decrease in rates.

Use the Following Figure to Answer the Question