Suppose the 10-year T-bond yield remains at 3.5% while the 1-year T-bill yield rises to 4.4%. What is the expected outlook for economic conditions following this change in the yield spread?

Question 18 options:

1)	The yield curve is downward sloping, which suggests the likelihood of a decline in short-term interest rates and a slowdown in the economy

2)	The yield curve is downward sloping, which suggests the likelihood of an increase in short-term interest rates and a slowdown in the economy

3)	The yield curve is upward sloping, which suggests the likelihood of a decline in short-term interest rates and a slowdown in the economy

4)	None of the above