Under the pure expectations hypothesis and constant real interest rates for different maturities, an upward-sloping yield curve would indicate __________________.

Yield curves are drawn by taking maturity on x axis and interest rate or yield on Y-axis. Upward sloping shows interest rate rise as maturity lenthens. A steep positive or upward sloping curve shows that investors expect future economic growth to be strong and this would gives rise to higher future inflation rate (& thus higher interest rates). Constant real interest rates means inflation adjusted interest rate is constant which means increase in inflation over time with increase in nominal interest rates.

What is the presence of a liquidity premium ?

Any additional compensation needed to stimulate investment in assets that cannot be quickly and effectively converted into cash at fair market value is known as a liquidity premium.
For instance, due to its relative illiquidity, a long-term bond will have a higher interest rate than a short-term bond.
The increased return is the liquidity premium that is being provided to the investor in exchange for the increased risk.

So the more about the presence of a liquidity premium visit.

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