SIE practice questionmediumYield Curves
An inverted yield curve typically signals:
- ARapid economic growth
- BA potential upcoming recession✓ Correct answer
- CA period of low inflation
- DAn increase in GDP
Explanation
Why B — A potential upcoming recession
An inverted yield curve (short-term rates higher than long-term rates) is a well-known predictor of economic recession. Rapid growth and GDP increases are more likely with a normal or steep curve.
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