SIE practice questionmediumEconomic Indicators
A flat yield curve often indicates:
- AUncertainty about future economic growth✓ Correct answer
- BStrong economic expansion
- CExpectations of rapidly rising inflation
- DAn inverted relationship between short and long rates
Explanation
Why A — Uncertainty about future economic growth
A flat yield curve suggests uncertainty about economic direction, as investors foresee little difference in risk between short- and long-term bonds. Strong expansion typically steepens the curve, while an inverted curve is different from flat.
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