Final answer:
A. Upward sloping
During a period of high economic growth, an upward sloping yield curve is typically observed, reflecting investors' expectations for higher future returns due to rising inflation and economic expansion.
Step-by-step explanation:
The yield curve that would be characteristic during a period of high economic growth is generally an upward sloping yield curve.
An upward sloping curve indicates that longer-term interest rates are higher than short-term rates, which is often the case in a growing economy where inflation is expected to rise.
This is because investors expect to be compensated with higher yields for the risk of inflation and this expectation of higher future returns on longer-term investments reflects optimism about economic growth.
In economics, the yield curve is a graphical representation of the interest rates on debt for a range of maturities. During a period of high economic growth, the yield curve is typically upward sloping, which means that short-term interest rates are lower than long-term interest rates.
This reflects investors' expectations of higher inflation and higher interest rates in the future. An upward sloping yield curve indicates that borrowing costs are expected to rise, which can result in increased business investment and economic growth.