Answer: a. Monetary policy is expansive and fiscal policy is expansive
Explanation:
Yield curves measure the relationship between time and interest so a steeply upward sloping yield curve would imply that interest rates are increasing with time but are lower in the short run.
An expansive monetary and fiscal policy is aimed at increasing the levels of growth in the economy and would lead to more money being in the hands of households and companies. This would lead to a lower interest in the short run as people will have more excess funds to loan out thereby increasing the supply of loanable funds which would reduce the interest attached.
