An Inverted Yield Curve Implies That

question 65

Multiple Choice

An inverted yield curve implies that

• A) long-term interest rates are lower than short-term interest rates.
• B) long-term interest rates are higher than short-term interest rates.
• C) long-term interest rates are the same as short-term interest rates.
• D) intermediate-term interest rates are higher than either short- or long-term interest rates.
• E) None of the options are correct.

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Definitions:

Outstanding Checks

Checks that have been issued and recorded in the account ledger but have not yet been cashed or cleared by the bank.

Checks Cleared

A term indicating that checks issued have been presented and successfully processed by a bank, deducting the amount from the payer's account.

Checks Written

Refers to checks that a company or individual has written and issued but which have not yet been cashed or cleared through the banking system.

NSF Check

A check that cannot be processed because the account it is drawn on does not have sufficient funds.