The Period 1974-1975 Is Somewhat Unique in U

question 41

Multiple Choice

The period 1974-1975 is somewhat unique in U.S. economic history due to the fact that:

• A) the output was growing rapidly and the inflation rate was falling.
• B) both the output and the inflation rate were falling.
• C) output was falling yet the inflation rate rose dramatically.
• D) output and the inflation rate were both rising.

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Definitions:

Treasury Bills

Treasury Bills are short-term government securities issued at a discount from the face value and redeemed at full face value upon maturity, typically used as a low-risk investment.

Opportunity Cost

The price paid for not selecting the next most favorable choice when deciding.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can invest in debt securities, influenced by the overall demand and supply.

Precautionary Motive

The need to hold cash as a safety margin to act as a financial reserve.