Use the figure to answer the question YTM O B A Maturity 1 year 20 year You are a financial analyst for the Federal Reserve Bank. One of your duties is to forecast future inflation. If you see the 20 year bond move from A to B on the graph, base on the expectations hypothesis, you would expect future inflation to be higher, because bond prices are falling. future inflation to be higher, because bond prices are rising. future inflation to be lower, because bond prices are rising. future inflation to be lower, because bond prices are falling. Use the figure to help you answer the question. YTM Maturity 1 year 20 year Assume congress passes a law that makes interest on 20 year bonds tax free (no taxes on 20 year bond interest), but interest on 1 year bonds is still taxed. Given this information you would expect the term structure to move to a. latter slope because demand for 20 year bonds would decrease. steeper slope because demand for 20 year bonds would decrease. steeper slope because demand for 20 year bonds would increase flatter slope because demand for 20 year bonds would increase