An inverted yield curve indicates that
A)an economic expansion has just begun.
B)an economic expansion has been going on for several years.
C)a recession is about to begin.
D)a recession is nearly over.

Question

Quizplus · Accepted Answer

An inverted yield curve is considered a strong signal that a recession is about to begin. It occurs when short-term Treasury bond yields are higher than long-term Treasury bond yields, indicating that investors have more confidence in the short-term outlook than the long-term outlook. This can happen when investors foresee a future of diminishing economic growth and falling rates.

An Inverted Yield Curve Indicates That