The difference,or spread,between short-term and long-term bond yields is

Question

Quizplus · Accepted Answer

The difference between short-term and long-term bond yields, also known as the yield curve, is a weak predictor of future yields and a better signal of inflation. Inflation expectations can cause long-term yields to increase while short-term yields remain stable, resulting in a steep yield curve. On the other hand, a flat yield curve occurs when short-term and long-term yields are similar and can predict an economic slowdown. Therefore, B is the correct answer as it explains the role of the yield curve in predicting inflation and economic slowdown.

The Difference,or Spread,between Short-Term and Long-Term Bond Yields Is