Fiscal Policy - The Bond Yield Curve
- A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 14 Nov 2021
in this short revision video, we look at the economics of the bond yield curve.
The yield curve is a way of comparing rates of return on bonds of differing maturity.
Normally we would expect yields on longer-dated bonds to be higher than for shorter-dated securities – because of the risks of inflation going forward).
There are occasions though when the yield curve can become ‘inverted’ - this means that short term interest rates are greater than on long-dated bonds.