You notice that when the inflation rate increases, the interest rate tends to increase. This observation indicates that
A) the variables have an inverse relationship.
B) higher inflation rates must cause a higher interest rate.
C) a scatter diagram of the inflation rate and the interest rate will show a positive relationship.
D) there might be false causality between inflation and the interest rate.

Question

Quizplus · Accepted Answer

A scatter diagram showing a positive relationship indicates that as one variable increases, the other variable also tends to increase, which is consistent with the observation.

You Notice That When the Inflation Rate Increases, the Interest