When Interest Rates Fall

question 106

Multiple Choice

When interest rates fall

• A)firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.
• B)firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding.
• C)firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding.
• D)firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.

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Definitions:

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, often referred to as the "I-knew-it-all-along" effect.

Scapegoat Theory

A social psychology concept suggesting that individuals or groups often blame someone else for their own problems, leading to feelings of prejudice against that person or group.

Just-World Phenomenon

The cognitive bias to believe that the world is fair and people get what they deserve.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic or decision.