Which Statement Is True About Interest Rate Movements

question 54

Multiple Choice

Which statement is true about interest rate movements?

• A) Interest rates move counter-cyclically with the business cycle.
• B) Long-term interest rates have greater swings than short-term rates.
• C) The expected rate of inflation impacts the level of interest rates.
• D) Bond prices and interest rates move directly with one another.

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Definitions:

Payoffs

The outcomes or returns from a particular action or decision, often used in the context of game theory and economic models.

Sherman Antitrust Act

Is a landmark federal statute in the United States that prohibits monopolistic business practices and promotes competition.

Cartel Agreements

An arrangement between competing firms to control prices or exclude entry of a new competitor in a market, often to maximize their own profits by limiting supply.

Price-fixing

An illegal agreement among competitors to set prices at a certain level rather than allowing them to fluctuate naturally with market forces.