In Which of the Following Situations Would You Prefer to Be

question 70

Multiple Choice

In which of the following situations would you prefer to be borrowing?

• A) The interest rate is 9 percent and the expected inflation rate is 7 percent.
• B) The interest rate is 4 percent and the expected inflation rate is 1 percent.
• C) The interest rate is 13 percent and the expected inflation rate is 15 percent.
• D) The interest rate is 25 percent and the expected inflation rate is 50 percent.

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Definitions:

Regression Toward the Mean

A statistical phenomenon wherein extreme scores on one occasion tend to be closer to the average on subsequent testing.

Illusory Correlation

A cognitive bias where people falsely perceive an association between two unrelated events or variables.

Random Assignment

A procedure in experimental designs that ensures each participant has an equal chance of being placed into any group, reducing biases.

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution of data, often using the mean, median, or mode.