3. We discussed changes in the yield curve that result from changes in the term premium, expectations of future interest rates, and monetary policy. In the table below, state whether each situation is related to the term premium (TP), expectations of interest rates, or monetary policy; whether you expect the given situation to result in a change to short-term or long-term yields; and whether it will make the yield curve steeper (more normal) or flatter (flat or inverted): Situation TP, Expectations, Steeper or or Policy? ST or LT Yields? Flatter? Interest rates are expected to increase due to strong economic growth. The Federal Reserve pursues a higher target of the federal funds rate. Perceived long-term risk increases due to worries about high inflation. Interest rates are expected to decrease due to weakening economic conditions. The Federal Reserve pursues a lower target of the federal funds rate. Perceived long-term risk decreases as inflation is expected to stabilize