Inverted yield curve in economics and finance

Before diving into the intricacies of the inverted yield curve, let's establish a foundation by understanding what a yield curve is. In its simplest form, a yield curve is a graphical representation of the interest rates on bonds of varying maturities. Typically, the x-axis denotes the time to maturity, while the y-axis represents the corresponding interest rates. By plotting these points and connecting them, we obtain a yield curve.