With the liquidity preference theory, a declining yield curve

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According to the liquidity preference theory, investors prefer more liquid short-term securities to long-term securities that are less liquid. Therefore, a declining yield curve, where short-term interest rates are increasing at a faster rate than long-term rates, suggests that investors anticipate a steeper drop in future spot rates than what is predicted by unbiased expectations. This is because they expect future interest rates to decline sharply, leading to higher bond prices and lower yields for long-term securities.

With the Liquidity Preference Theory, a Declining Yield Curve