The yield curve is typically inverted at the peak of the business cycle.

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when short-term interest rates are higher than long-term interest rates, indicating market expectations of economic slowdown or recession. As the economy reaches its peak and begins to slow down, the demand for long-term bonds increases and their yields decrease, leading to an inverted yield curve. Therefore, the statement is true.

The Yield Curve Is Typically Inverted at the Peak of the Business