Downward sloping yield curves often indicate
A) a recession in the near future.
B) an economic expansion in the near future.
C) higher inflation in the near future.
D) a weaker dollar in the foreign exchange markets.

Question

Quizplus · Accepted Answer

Downward sloping yield curves, also known as inverted yield curves, are often interpreted as a sign that investors expect a recession in the near future. This expectation leads to lower long-term interest rates compared to short-term rates, as investors seek safety in longer-term government securities.

Downward Sloping Yield Curves Often Indicate