Which of the Following Is a False Statement

question 9

Multiple Choice

Which of the following is a false statement?

• A) risky investments may produce large losses
• B) risky investments may produce large gains
• C) the coefficient of variation is a risk measure
• D) risk-averse investors cannot be induced to invest in risky assets

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Definitions:

Self-correcting Economy

An economy that possesses mechanisms to automatically adjust itself to balance out recessions or inflations without external intervention.

Recessionary Gap

The difference between the actual output of an economy and its potential output if all resources were fully employed, indicating underperformance.

Expansionary Gap

A situation in an economy where total spending exceeds the production capacity, leading to inflationary pressures and a rise in output.

Effectiveness Lag

The time needed for changes in monetary or fiscal policy to affect the economy