An Increase in an Indicator of Inflation Such as the Consumer

question 6

Multiple Choice

An increase in an indicator of inflation such as the consumer price index may create expectations of ________ interest rates and place _______ pressure on the prices of money market securities.

• A)lower; downward
• B)lower; upward
• C)higher; downward
• D)higher; upward

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Definitions:

Alternative Hypothesis

In hypothesis testing, the hypothesis that proposes a difference or effect, contrary to the null hypothesis, which implies no effect or difference.

Null Hypothesis

A statement or assumption that there is no effect or no difference, and it serves as the starting point for statistical testing.

Sample Proportion

The fraction or percentage of observations in a sample that belong to a particular category, used to estimate the proportion in the entire population.

Two-Tailed Hypothesis

A statistical test hypothesis that considers both directions of deviation from the null hypothesis, thus testing for the possibility of both positive and negative effects.