A steep upward-sloping yield curve indicates that short-term interest rates are expected to
A) neither rise nor fall in the near future.
B) remain relatively unchanged, but that long-term rates are expected to fall.
C) neither rise nor fall, but that long-term rates are expected to rise moderately.
D) rise moderately in the near future.

Question

Quizplus · Accepted Answer

A steep upward-sloping yield curve indicates that short-term interest rates are expected to rise moderately in the near future, while long-term rates are expected to be even higher. This is often interpreted as a sign of expanding economic activity and potential inflation.

A Steep Upward-Sloping Yield Curve Indicates That Short-Term Interest Rates