When the yield curve is downward sloping:
A) people are expecting an economic slowdown.
B) short-term yields are lower than long term yields.
C) people are expecting higher inflation in the future.
D) people could be expecting a tightening in monetary policy.

Question

Quizplus · Accepted Answer

A downward sloping yield curve, also known as an inverted yield curve, often indicates that investors expect an economic slowdown or recession, as they anticipate lower interest rates in the future due to reduced economic activity.

When the Yield Curve Is Downward Sloping