Which of the Following Factors Would Be Most Likely to Lead

question 30

Multiple Choice

Which of the following factors would be most likely to lead to an increase in interest rates in the economy?

• A) Households reduce their consumption and increase their savings.
• B) The Federal Reserve decides to try to stimulate the economy.
• C) There is a decrease in expected inflation.
• D) The economy falls into a recession.
• E) Most businesses decide to modernize and expand their manufacturing capacity,and to install new equipment to reduce labor costs.

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Definitions:

High-Risk Bond

A bond with a lower credit rating, indicating a higher risk of default, but offering higher potential returns to compensate for this risk.

High Yields

Bonds that offer higher interest rates because they have lower credit ratings, implying greater risk of default.

Oligopolies

Markets dominated by a small number of large firms, leading to limited competition.

Merger Waves

Periods of increased activity and volume in mergers and acquisitions across various industries, typically linked to economic, regulatory, or technological changes.