Which of the following statements is true about an inverted yield curve?
A)Long term interest rates are less than short term interest rates and the market is expecting future interest rates to rise
B)Long term interest rates are less than short term interest rates and the market is expecting future interest rates to fall
C)Long term interest rates are greater than short term interest rates and the market is expecting future interest rates to rise
D)Long term interest rates are greater than short term interest rates and the market is expecting future interest rates to fall

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when long-term interest rates are lower than short-term interest rates. This implies that the market is expecting future interest rates to fall, resulting in a higher demand for long-term bonds and driving down their yields.

Which of the Following Statements Is True About an Inverted