Use the Following Figure to Answer the Question

question 70

Multiple Choice

Use the following figure to answer the question :

-Interest rates increased continuously during the 1970s. The most likely explanation is

• A)banking failures that reduced the money supply.
• B)a rise in the level of income.
• C)the repeated bouts of recession and expansion.
• D)increasing expected rates of inflation.

---

Definitions:

Junk Bonds

High-risk, high-yield bonds issued by companies with lower credit ratings than investment-grade bonds.

Speculative

Involving financial actions that carry a significant risk of losing all value but also hold the promise of substantial gains.

Ratings

Assessments or evaluations used to rank or score entities based on certain criteria, such as financial strength or quality.

Money Market Instruments

Financial instruments that provide liquidity and short-term financing in the money market, such as treasury bills, commercial paper, and certificates of deposit.