Consider the Basic AD/AS Model

question 26

Multiple Choice

Consider the basic AD/AS model.Suppose firms are currently producing beyond their normal capacity.A change in AD leads to a relatively

• A)large change in price level and a large change in real GDP.
• B)large change in price level and a small change in real GDP.
• C)small change in price level and a large change in real GDP.
• D)small change in price level and a small change in real GDP.
• E)no change in both price and output.

---

Definitions:

Risky Portfolio

An investment portfolio that contains assets with a higher degree of volatility and potential for loss, aiming for higher returns.

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of data points.

Sharpe Ratio

A measure that indicates the average return earned in excess of the risk-free rate per unit of volatility or total risk, assessing the performance of an investment.

Risk Aversion

The preference to avoid uncertainty and potential financial loss.