During the 1974-1975 Recession, the Rate on Commercial Paper Increased

Multiple Choice

During the 1974-1975 recession, the rate on commercial paper increased relative to the rate on T-Bills. This was an indication of the fact that

A) investors had become nervous about the ability of the federal government to meet its financial obligations.
B) the inflation rate had increased significantly.
C) investors had become concerned about default risk in the short-term market.
D) interest on commercial paper had lost its exemption from the federal income tax.