Historically,why Have High Inflation Rates Tended to Be Associated with High

question 37

Multiple Choice

Historically,why have high inflation rates tended to be associated with high nominal interest rates?

• A)Individuals will spend more when they expect their investments to increase in value.
• B)Growth in investment and savings is encouraged when consumers are judged to be overspending.
• C)High inflation leads to a decrease in purchasing power and thus increases the attractiveness of investment over consumption in the short term.
• D)The real interest rate needs to be high enough so that individuals can expect their savings to have greater purchasing power in the future than in the present.
• E)High interest rates mean that savings grow faster,and when people have more money to spend,prices will increase.

---

Definitions:

Behavioral Conditioning Therapy

A method of treatment that uses principles of learning, such as conditioning and reinforcement, to alter behavior.

Claustrophobia

An anxiety disorder characterized by an irrational fear of being in enclosed or narrow spaces, leading to panic attacks in severe cases.

Cognitive Therapy

A form of psychotherapy that emphasizes the importance of thinking in how we feel and what we do, aiming to change negative patterns of thinking.

Psychodynamic Therapy

A therapeutic approach that aims to explore the psychological roots of emotional suffering through self-reflection and self-examination, focusing on the influence of the unconscious mind on behavior.