The Second Crisis of Economic Theory Refers to

question 107

Multiple Choice

The second crisis of economic theory refers to

• A)The typical fiscal policy trade-off between unemployment and inflation.
• B)The dominance of Keynesian views in fiscal policy to the exclusion of newer,more enlightened viewpoints.
• C)An emphasis on the level of output without concern for the content of output in terms of fiscal policy.
• D)Our inability to maintain full employment output over any significant period of time.

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Definitions:

Traditional CAPM

The Capital Asset Pricing Model, a framework used to determine the expected return on an investment, factoring in risk-free rate, the asset's beta, and the market risk premium.

Fama-French Three-factor Model

A model that expands the CAPM by adding size risk and value risk factors to the market risk factor, explaining stock returns more accurately.

Firm Size

Generally refers to the scale of a business entity in terms of its assets, revenues, or number of employees, which can affect its operations and financial performances.

Book-to-market Ratio

A valuation metric comparing a company's book value to its market value.