Which of the Following Statements Is CORRECT

question 15

Multiple Choice

Which of the following statements is CORRECT?

• A) If expected inflation increases, interest rates are likely to increase.
• B) If individuals in general increase the percentage of their income that they save, interest rates are likely to increase.
• C) If companies have fewer good investment opportunities, interest rates are likely to increase.
• D) Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of bankruptcy, hence the riskiness of all debt securities.
• E) Interest rates on long-term bonds are more volatile than rates on short-term debt securities like T-bills.

---

Definitions:

Response Paired

A concept in conditioning where a specific stimulus is repeatedly and consistently followed by a particular response.

Extinction

In psychology, the diminishing of a conditioned response, typically when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Repeated Pairings

A concept from behavioral psychology where repeated association of two stimuli results in the learning or conditioning of a response.

Prior Linking

The process of establishing a connection or association between concepts or items in memory before they are encountered again, facilitating recall or recognition.