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

The post hoc fallacy is the incorrect assumption that because one event follows another, the first event must be the cause of the second. In this case, concluding that higher stock prices cause lower interest rates simply because they occur sequentially is an example of this fallacy.

You Observe That When Stock Prices Rise, Interest Rates Soon