Which of the Following Is Likely to Cause Monetary Restraint

question 128

Multiple Choice

Which of the following is likely to cause monetary restraint to be effective?

• A)High expectations overwhelm high interest rates.
• B)Businesses have the ability to borrow funds from foreign banks.
• C)People behave rationally and borrow less when interest rates rise.
• D)None of the choices are correct.

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Definitions:

Efficient Markets Hypothesis

The theory that all available information is already reflected in asset prices, implying that stocks always trade at their fair value, making it impossible to consistently achieve higher-than-average returns.

Efficient Markets Hypothesis

The theory that all available information is already reflected in stock prices, thus making it impossible to consistently achieve higher returns.

Return And Risk

Concepts in finance and investing that denote the potential profit or loss and the uncertainty associated with an investment.

Asset Bubble

A situation in financial markets where the price of an asset inflates to levels far beyond its intrinsic value, leading to an eventual crash.