Which of the Following Statements Is CORRECT

question 15

Multiple Choice

Which of the following statements is CORRECT?

• A) If expected inflation increases, interest rates are likely to increase.
• B) If individuals in general increase the percentage of their income that they save, interest rates are likely to increase.
• C) If companies have fewer good investment opportunities, interest rates are likely to increase.
• D) Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of bankruptcy, hence the riskiness of all debt securities.
• E) Interest rates on long-term bonds are more volatile than rates on short-term debt securities like T-bills.

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Definitions:

Experimental Conditions

The controlled variables and environment in which an experiment is conducted to test hypotheses and determine the effects on the dependent variable.

Critical Thinking

The process of objectively analyzing and evaluating an issue in order to form a judgment.

Illusory Correlation

The perception of a relationship between two variables when no such relationship exists.

Psychological Research

The systematic investigation of the mind and behavior through controlled experimentation and observation.