An inverted yield curve implies that
A) long-term interest rates are lower than short-term interest rates.
B) long-term interest rates are higher than short-term interest rates.
C) long-term interest rates are the same as short-term interest rates.
D) intermediate-term interest rates are higher than either short- or long-term interest rates.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when long-term interest rates fall below short-term interest rates, indicating investors' expectations for a future economic downturn.

An Inverted Yield Curve Implies That