Which statement is true about interest rate movements?
A) Interest rates move counter-cyclically with the business cycle.
B) Long-term interest rates have greater swings than short-term rates.
C) The expected rate of inflation impacts the level of interest rates.
D) Bond prices and interest rates move directly with one another.

Question

Quizplus · Accepted Answer

The expected rate of inflation impacts the level of interest rates because lenders demand higher rates to compensate for the decrease in purchasing power over time.

Which Statement Is True About Interest Rate Movements