Based on Our Understanding of the Determinants of the Interest

question 39

Multiple Choice

Based on our understanding of the determinants of the interest rate and bond prices,we know that a reduction in income will cause

• A)an increase in bond prices and an increase in the interest rate (i).
• B)a reduction in bond prices and an increase in i.
• C)an increase in bond prices and a reduction in i.
• D)a reduction in bond prices and a reduction in i.
• E) none of the above

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Definitions:

Credit Score

A numerical expression based on a level analysis of a person's credit files, representing the creditworthiness of the individual.

Industrialization

The process in which a society or country transforms itself from a primarily agrarian society into one based on the manufacturing of goods and services.

Privatization

The process of transferring ownership of a business, enterprise, agency, or public service from the government to private individuals or organizations.

Deregulation

The process of removing government regulations, oversight, and involvement from an industry.