A common practice of government: Financially stressed nations, facing high yield spreads (interest rate payments above relatively risk-free bonds), issue less debt and rely increasingly on short-term debtactively refinancing short-term debt, but simply retiring long-term debt as it comes due.

Imagine that the yield curve is currently flat. The Treasury announces that they will no longer issue securities with maturities longer than two years. As a result, long-term government bonds will be refinanced using only relatively short-term debt. If the "market segmentation theory" of the yield curve is correct, what will happen to the slope of the yield curve as a result of this policy change? Explain briefly.