Which of the Following Would Be Most Likely to Lead

question 30

Multiple Choice

Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy?

• A) Households start saving a larger percentage of their income.
• B) The economy moves from a boom to a recession.
• C) The level of inflation begins to decline.
• D) Corporations step up their expansion plans and thus increase their demand for capital.
• E) The Federal Reserve uses monetary policy in an attempt to stimulate the economy.

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Definitions:

Preferred Stock

Preferred stockholders received dividends before common stockholders.

Common Stock

A type of stock where the stockholders receive dividends only when the board of directors elects to issue dividends.

Dividends Totaling

The sum of dividend payments received by shareholders within a specific period.

Net Proceeds

The total amount of money received from a sale or transaction, after all expenses and costs have been subtracted.