Please provide a detailed explanation so I can truly understand the material for future reference, Thank you.

5. (6 points) Ifa yield curve looks like the one shown here, what is the market predicting about the movement of future short-term interest rates (assuming both expectations theory and liquidity premium theory)? What might the yield curve indicate about the market's predictions about the inflation rate in the future? What should a borrower do, borrow short or long? What about a bond investor, should she buy short-term or long-term bonds or other term bonds? Briefly explain your answers. Yield to Maturity Term to Maturity