Stock Market Analysts Often Argue That Lower Interest Rates Are

question 143

Multiple Choice

Stock market analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?

• A) No; lower interest rates will tend to slow down the economy, and this will be bad for the stock market.
• B) Yes; the lower rates of interest will increase the value of future income (and capital gains), and stock prices will rise to reflect this factor.
• C) No; the lower rates of interest will reduce the value of future income (and capital gains), and this will cause stock prices to fall.
• D) Yes; the lower interest rates will cause inflation, and inflation is generally good for the stock market.

---

Definitions:

Lithium

A chemical element used as a medication primarily for bipolar disorder, helping to stabilize mood and reduce the extremes of mania and depression.

Selective Serotonin Reuptake Inhibitor

A class of drugs often used as antidepressants that inhibit the reabsorption (reuptake) of serotonin in the brain, increasing the amount available.

Schizophrenia

A long-term mental disorder involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception, inappropriate actions and feelings, withdrawal from reality and personal relationships into fantasy and delusion, and a sense of mental fragmentation.

Conventional Antipsychotics

A class of medications used to treat symptoms of psychosis, such as hallucinations and delusions, primarily by blocking dopamine receptors.