Capital MarketsQuestion 340 of 398
An inverted yield curve, in which short-term yields are higher than long-term yields, is often viewed by economists as a potential signal of:
a.Accelerating economic expansion
b.An upcoming economic slowdown or recession
c.Rising corporate profits
d.A stable, unchanging economy
Explanation
An inverted yield curve occurs when short-term interest rates exceed long-term rates, an unusual condition many analysts treat as a warning sign of a possible future recession. It can reflect market expectations that rates, and economic activity, will decline going forward.
Practice all 398 questions free — no signup required.
Related questions on this topic
- The Consumer Price Index (CPI) is primarily used to measure:
- As market interest rates rise, what generally happens to the prices of existing fixed-rate bonds?
- A normal (positive) yield curve is best described as one in which:
- During the expansion (recovery) phase of the business cycle, which of the following is typically observed?
- Which sequence correctly lists the four phases of the business cycle?
- Inflation is best defined as:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review