Recently, the Treasury yield curve has flattened. What does a flat yield curve

suggest about investor expectations?

A$.$ Investors expect an increase in inflation and that short$-$term yields will fall in the future.

B$.$ Investors expect an increase in economic activity and that short$-$term yields will rise in

the future.

C$.$ Investors expect a decline in economic activity and that short$-$term yields will fall in the

future.

D$.$ Investors expect a decrease in inflation and that short$-$term yields will rise in the future.