When economists speak of "the" interest rate, they mean:
A) the rate on 90-day Treasury bills.
B) the rate on 30-year government bonds.
C) the "prime" rate on loans.
D) no particular interest rate, since it is assumed that various interest rates tend to move up and down together.

Question

Quizplus · Accepted Answer

When economists speak of "the" interest rate, they are referring to a general interest rate that reflects the current state of the economy. This interest rate is not tied to any specific type of loan or investment, and it may be influenced by a variety of factors such as inflation, monetary policy, and global economic conditions. While specific interest rates like the rates on Treasury bills or government bonds can provide insights into the market, they are not the sole determinant of "the" interest rate. Therefore, option D is the best choice as it suggests that there is no particular interest rate that serves as the definitive indicator of the overall interest rate level.

When Economists Speak of "The" Interest Rate, They Mean