A yield curve that slopes upward says each of the following, except:
A) Short-term rates are expected to decrease
B) People may be expecting short-term rates will be higher in the future
C) Short-term rates could be expected to remain constant
D) Long-term interest rates are higher than current short-term rates

Question

Quizplus · Accepted Answer

A yield curve that slopes upward indicates that long-term interest rates are higher than current short-term rates. It does not necessarily say that short-term rates are expected to decrease. In fact, an upward-sloping yield curve may suggest that people expect short-term rates to increase in the future, but it does not explicitly state this. Short-term rates could also be expected to remain constant.

A Yield Curve That Slopes Upward Says Each of the Following