You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates. This would be an example of
A) the fallacy of composition.
B) trade-off among economic goals.
C) the post hoc fallacy.
D) the use of loaded terminology.

Question

Quizplus · Accepted Answer

This is an example of the post hoc fallacy, which assumes that just because two events occur in sequence, one must have caused the other without taking into account other possible causes or factors. In reality, changes in stock prices and interest rates may be influenced by a variety of economic and market factors, and may not have a direct causal relationship between them.

You Observe That When Stock Prices Rise, Interest Rates Soon