An inverted yield curve implies that
A)long-term interest rates are lower than short-term interest rates.
B)long-term interest rates are higher than short-term interest rates.
C)long-term interest rates are the same as short-term interest rates.
D)intermediate term interest rates are higher than either short- or long-term interest rates.
E)None of the options

Question

Quizplus · Accepted Answer

The inverted, or downward sloping, yield curve is one in which short-term rates are higher than long-term rates.The inverted yield curve has been observed frequently, although not as frequently as the upward sloping, or normal, yield curve.

An Inverted Yield Curve Implies That