At any time, the slope of the yield curve is affected by

Question

Quizplus · Accepted Answer

All of the options (inflationary expectations, liquidity preferences, and comparative equilibrium of supply and demand in the short-term and long-term market segments) can affect the slope of the yield curve. Factors such as changes in inflationary expectations can lead to an increase in long-term rates relative to short-term rates, while changes in liquidity preferences can lead to a flatter or steeper yield curve. Additionally, changes in the comparative equilibrium of supply and demand for short-term and long-term securities can influence the slope of the yield curve.

At Any Time, the Slope of the Yield Curve Is