Which of the Following Best Summarizes How Changes in Interest

question 71

Multiple Choice

Which of the following best summarizes how changes in interest rates influence stock prices?

• A)A fall in interest rates increases the quantity demanded of bonds and decreases stock prices.
• B)A fall in interest rates will be expected to increase the demand for goods and services, to increase the earnings of firms, and in turn to increase their stock prices.
• C)A fall in interest rates makes the expected return on stocks greater than the expected return on bonds.
• D)Both b and c

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Definitions:

Double Jeopardy

A legal principle that prohibits an individual from being tried twice for the same crime, ensuring protection against repeated legal actions.

Self-Incrimination

The act of implicating oneself in a crime, which the Fifth Amendment of the U.S. Constitution protects against by allowing individuals to refrain from answering questions that could incriminate them.

Selective Incorporation

A constitutional doctrine that ensures states cannot enact laws that infringe on the rights of citizens that are protected under the Bill of Rights.

Fourteenth Amendment

An amendment to the U.S. Constitution, ratified in 1868, granting citizenship to all persons born or naturalized in the United States, including former slaves, and guaranteeing all citizens equal protection of the laws.