“Operation Twist” is a program conducted by the U.S. Federal Reserve (the Fed) in late  2011 and 2012 to help stimulate the economy. Through this program, the Fed sold shortterm bonds it had already held, and the sales proceeds were used to purchase longer-term  Treasury bonds. Such operation would “twist” the yield curve of Treasury bonds. Draw a  graph to illustrate and explain in words how the yield curve of the U.S. Treasury bonds  would be “twisted” by this program.

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