An inverted yield curve is often said to predict a slowdown in economic activity because a. it implies that term premia for long-term bonds have declined, leading to more stringent borrowing conditions and therefore a drop in aggregate demand.
b. according to the Expectations Theory (i. e. assuming term premia are constant), lower long term rates imply that current short rates are too high, which will slow down the economy in the future.
c. according to the Expectations Theory (i. e. assuming term premia are constant), markets expect a slowdown in aggregate demand in the future to which monetary policy will react by lowering interest rates.
d. it implies that term premia for long-term bonds have increased due to increased inflation risk which is itself an indicator of economic troubles.

Quick calculate the roi dollar amount and percentage for these example investments. a. you invest $50 in a government bond that says you can redeem it a year later for $55. use the instructions in lesson 3 to calculate the roi dollar amount and percentage. (3.0 points) tip: subtract the initial investment from the total return to get the roi dollar amount. then divide the roi dollar amount by the initial investment, and multiply that number by 100 to get the percentage. b. you invest $200 in stocks and sell them one year later for $230. use the instructions in lesson 3 to calculate the roi dollar amount and percentage. (3.0 points) tip: subtract the initial investment from the total return to get the roi dollar amount. then divide the roi dollar amount by the initial investment, and multiply that number by 100 to get the percentage.