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

Respuesta :

Answer:C. The post hoc fallacy.

Explanation:The post hoc fallacy is a fallacy that tends to describe the relationship between two situation or factors, THE POST HOC FALLACY STATES THAT IF ONE SITUATION OCCURS THEN THE OCCUR WILL OCCUR.

An example of post Hoc fallacy is the linking of the reduced interest rate to the high stock prices is type of relationship described in the question is a confusing correlation and causation.

Answer:

The correct answer is letter "C": The post hoc fallacy.

Explanation:

The post hoc fallacy or faulty causation fallacy is used when the correlation of events is confused with their causation meaning people believe one event is the result of another without assuming other factors that can really cause the initial event to take place.

In this case, increases in stock price are associated with a fall in interest rates. Even if it is true in real life, that false belief does not consider that stocks price tend to raise when the issuing company reports beating its earnings expectations during a quarter, when new revolutionary technology was discovered by a firm or if a drug manufacturer found the treatment for a disease thanks to a vaccine or pill the firm will offer in the open market.