The slope of the yield curve seems to predict the performance of the economy:
A) Usually with a 3-month lag
B) Usually with a one-year lag
C) Usually within a few weeks
D) Usually with a two-year lag

Question

Quizplus · Accepted Answer

The slope of the yield curve usually predicts the performance of the economy with a one-year lag. When the yield curve is steep, meaning the gap between short-term and long-term rates is large, it indicates strong economic growth in the near future. When the yield curve is flat or inverted, meaning short-term rates are higher or equal to long-term rates, it signals economic weakness or recession in the next 6 to 18 months.

The Slope of the Yield Curve Seems to Predict the Performance