I refer to Exhibit 20 on page 69 of CFAI text. Can anyone explain the relationship between yield curve and the monetary/fiscal policies ? Any tips to remember this QUICKLY on exam will be of great help. Thanks!
Both are loose - yield curve upward sloping Both are tight - yield curve downward sloping Monetary is tight, fiscal is loose - flat yield curve Monetary is loose, fiscal is tight - moderately upward sloping.
ws’s explanation on another thread is an easy way to remember: http://www.analystforum.com/phorums/read.php?13,692052,692077#msg-692077