Given the above term structure of interest rates,which of the following is most likely in the future?
Option I Interest rates will rise.
Option II Economic growth will slow.
Option III Long-term rates will fall relative to short-term rates.

Question

Quizplus · Accepted Answer

A) A sharply increasing (steep) yield curve, with long-term rates much higher than short-term rates, generally indicates that interest rates are expected to rise in the future. The yield curve tends to be steep as the economy comes out of a recession.

Given the Above Term Structure of Interest Rates,which of the Following