An Increase in Government Spending Will

question 50

Multiple Choice

An increase in government spending will

• A)not affect aggregate demand unless it is debt-financed
• B) not affect aggregate demand if it is financed by a tax increase of equal magnitude
• C)decrease aggregate demand if it is financed by a tax increase of equal magnitude
• D)stimulate aggregate demand by less than a tax decrease of equal magnitude
• E)none of the above

Learn the significance of the market risk premium and how it affects investments.

Calculate and interpret portfolio beta as a measure of risk relative to the market.

Learn how world events and investor risk aversion impact the market risk premium.

Understand the role of the security market line (SML) in CAPM.

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Definitions:

Self-Evident Meaning

Something that is clearly or obviously understood without the need for explanation or justification.

Comprehend Two Languages

The ability to understand and process information in two different languages.

Mutually Intelligible

pertains to languages or dialects that can be understood by speakers of each without prior study or special effort.

Communication System

An arrangement of technologies and processes for transmitting information from one point to another through verbal, written, or digital means.