If People Expect Nominal Interest Rates to Be Higher in the Future

question 1

Multiple Choice

If people expect nominal interest rates to be higher in the future, the expected return on bonds ________, and the demand for money ________.

• A) rises; increases
• B) rises; decreases
• C) falls; increases
• D) falls; decreases

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Definitions:

Fixed Ratio

A schedule of reinforcement where a response is only reinforced after a specified number of responses.

Variable Ratio

A reinforcement schedule in which responses are rewarded after a varied number of responses, enhancing motivation.

Puzzle Box

An experimental apparatus used in animal learning studies, especially with cats, to observe problem-solving behavior when an animal is placed in a confined space with a mechanism to open a door.

Mild Shocks

Low-intensity electrical stimuli used in various psychological experiments to study behavior, learning, and perception.