When the yield curve is flat or downward-sloping, it suggests that the economy is more likely to enter ________.
A) a recession
B) an expansion
C) a boom time
D) a period of increasing output

Question

Quizplus · Accepted Answer

A flat or downward-sloping yield curve indicates that short-term interest rates are close to long-term interest rates. This suggests that investors are not expecting significant growth in the future and may even be predicting an economic downturn or recession.

When the Yield Curve Is Flat or Downward-Sloping, It Suggests