SIE practice questionmediumYield Curves
An inverted yield curve may indicate which economic condition?
- AEconomic expansion
- BHigher future inflation
- CA possible upcoming recession✓ Correct answer
- DStable, low unemployment
Explanation
Why C — A possible upcoming recession
Inverted yield curves historically precede recessions. Higher inflation (B) is indicated by a steep curve. Expansion (C) and low unemployment (D) are not signals of an inverted curve.
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