Which of the Following Is an Implication of the Mean

question 15

Multiple Choice

Which of the following is an implication of the mean reversion of interest rates?

• A) Interest rates cannot become negative
• B) When short-term interest rates are high they tend to move down
• C) The term structure of interest rates tends to be upward sloping
• D) When short-term interest rates are low they tend to stay low

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Definitions:

Karl Marx

A 19th-century philosopher, economist, and revolutionary socialist who developed the theory of Marxism, focusing on the conflicts within capitalism and its eventual overthrow.

Milton Friedman

An influential American economist known for his strong belief in free-market capitalism and for his role in the development of monetarism.

Murray Weidenbaum

An economic advisor and scholar known for his work on public policy and regulation, serving as the chairman of the Council of Economic Advisers under President Ronald Reagan.

Induced Consumption

The concept that the level of consumer spending increases as disposable income rises, and decreases as disposable income falls, all else being constant.