Positive test cases verify the expected behavior of the API, while negative test cases focus on uncovering flaws or vulnerabilities in the API under adverse conditions.

API encryption, by ensuring data integrity during transmission, plays a crucial role in securing the communication between clients and servers. It prevents unauthorized access, eavesdropping, or tampering with sensitive information, thereby contributing to the overall security of an application.

Security testing for an API handling sensitive data should prioritize data encryption to ensure that the user's sensitive information is securely transmitted and stored. Encryption helps protect data from unauthorized access, providing a crucial layer of security.

The correct option is JSON. RESTful APIs primarily use JSON (JavaScript Object Notation) for data format due to its lightweight and easy-to-read structure. Unlike SOAP, which commonly employs XML, JSON is more concise and suitable for web-based communication.

Penetration Testing in API security testing involves actively simulating attacks to identify vulnerabilities and validate the effectiveness of security measures. It helps ensure that the API can withstand various security threats and provides insights into potential weaknesses.

In scenarios where API response times are critical, load testing becomes essential. Load testing helps assess how the API performs under various loads, ensuring that it meets response time requirements even under high user demand.

The HTTP method GET is considered safe because it should not alter the state of the resource. It is used for retrieving information from the server without causing any side effects. Unlike POST or DELETE, which can modify or delete data, a GET request is supposed to be idempotent and should not change the state of the server.

Managing versioning in third-party API integrations involves including the version number in the request headers. This allows for smooth transitions between versions and ensures compatibility with the desired API functionality.

"Stubbing" tools are commonly used in API testing to emulate the behavior of third-party services. Stubs allow developers to define specific responses from API endpoints, enabling thorough testing of the application's interaction with external services.

Data federation strategies, such as schema stitching, are essential for ensuring data consistency when integrating with multiple microservices. This approach should be considered in testing for both consistency and performance.