If the interest rate on three-month Treasury securities is 6 percent and the interest rate on ten-year Treasury securities is 4 percent, then
A)the economy has probably just emerged from a recession.
B)the yield curve slopes upward steeply.
C)a recession is likely to occur.
D)the economy is probably in the middle of an economic expansion.

Question

Quizplus · Accepted Answer

When the interest rate on short-term securities (like three-month Treasury securities) is higher than the interest rate on long-term securities (like ten-year Treasury securities), it indicates an inverted yield curve. An inverted yield curve is often considered a predictor of a recession.

If the Interest Rate on Three-Month Treasury Securities Is 6