If Interest Rates in the United States Rise

question 244

Multiple Choice

If interest rates in the United States rise

• A)the value of the dollar will fall as foreign investors sell their U.S.investments.
• B)the value of the dollar will rise as the foreign investors increase their holdings of U.S.investments.
• C)the value of the dollar will fall as foreign investors increase their holdings of U.S.investments.
• D)the value of the dollar will rise as foreign investors sell their U.S.investments.

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Definitions:

Availability Heuristic

A cognitive bias wherein individuals judge the probability of events based on how easily examples come to mind.

Representativeness Heuristic

A cognitive shortcut that involves making judgments about the probability of an event under uncertainty, based on how much it resembles the typical case.

Theory of Mind

The ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and others, and to understand that others have beliefs, desires, and intentions that are different from one's own.

Transference

The process by which emotions, desires, or expectations are redirected and applied to a new object or person, often unconsciously and stemming from previous relationships.