Suppose that the current one-year interest rate is 2 percent, the current two-year interest rate is 2.5 percent, and the three-year rate is 4 percent. Assuming the Expectations Hypothesis is correct, calculate the one-year interest rates expected to prevail one year and two years from now. Express your answer in percent terms and round it to the nearest .01 percent (e.g., .0159 equals 1.60 percent).

One year from now: ____percent.

Two years from now:___ percent.

Is the yield curve expected to rise, fall or remain unchanged in one year?