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) Tradeoff among economic goals
C) The post hoc fallacy
D) The use of loaded terminology

Question

Quizplus · Accepted Answer

This would be an example of the post hoc fallacy because it assumes that one event, in this case higher stock prices, causes another event, lower interest rates, without any evidence of a causal relationship. Just because two events are correlated does not mean that one caused the other.

You Observe That When Stock Prices Rise, Interest Rates Soon