In April 2004, the US economy was struggling to get out of a recession (jobless recovery), but investors were confident that the economy would recover soon and that the Fed would raise the short-term interest rate. According to the expectations hypothesis what kind of the yield curve typically arises in such a period:

Select one:

a.

A hump-shaped yield curve

b.

A downward slopping yield curve

c.

An upward sloping yield curve

d.

A flat yield curve