An inverted yield curve
A) means that long-term bonds are yielding more than short-term bonds.
B) results when investor demand for longer maturities exceeds the demand for shorter maturities.
C) rewards long-term investors for the additional risk they are assuming.
D) sometimes results from actions by the Federal Reserve to control inflation.

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when short-term interest rates are higher than long-term rates. It can result from the Federal Reserve raising short-term rates to control inflation, leading to higher short-term yields compared to long-term yields.

An Inverted Yield Curve