Question 998 yield curve, term structure of interest rates
Which of the following statements is NOT correct? An inverted US government bond yield curve indicates that:
(a) Bond market participants believe that the US Federal Reserve will lower short term interest rates in the future.
(b) Fiscal policy will be more expansionary, with lower government spending and higher taxes.
(c) Bond market participants expect that the national economy is expected to have lower economic growth in the future.
(d) Inflation is likely to be very high in the future.
(e) Long term bond yields to maturity (YTM's) are lower than short term bond YTM's.