The expectations theory says that the yield curve can slope upward or downward.

Question

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The expectations theory states that the shape of the yield curve depends on the market's expectations of future interest rates. If investors expect rates to rise, the yield curve will slope upward (i.e. longer-term rates will be higher than short-term rates). Conversely, if investors expect rates to fall, the yield curve will slope downward (i.e. longer-term rates will be lower than short-term rates).

The Expectations Theory Says That the Yield Curve Can Slope