Refer to the Following Figure to Answer the Following Questions

question 140

Multiple Choice

Refer to the following figure to answer the following questions.
-According to the figure,if an expansionary monetary policy is fully expected,that policy will cause an economy initially in full-employment equilibrium to see real gross domestic product (GDP)

• A) increase from Y₂ to Y₃.
• B) first increase from Y₂ to Y₃ but then decrease back to Y₂.
• C) stay at Y₂.
• D) decrease from Y₂ to Y₁.
• E) increase from Y₁ to Y₂.

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Definitions:

Market Portfolio

A theoretical portfolio that includes all assets available in the market, with each asset weighted by its market capitalization.

Beta

A benchmark for evaluating the volatility or systematic risk of a security or portfolio vis-à-vis the wider market.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government securities.

Market Portfolio

A theoretical bundle of investments that includes all types of assets available in the market, with each asset weighted by its market capitalization.