Economics & AnalysisQuestion 14 of 110
A yield curve that slopes downward, with short-term rates higher than long-term rates, is described as which of the following?
a.A normal yield curve
b.A flat yield curve
c.An inverted yield curve
d.A humped yield curve
Explanation
An inverted yield curve occurs when short-term interest rates exceed long-term rates and is often watched as a potential recession signal. A normal curve slopes upward. A flat curve shows little difference between short and long maturities.
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