If the Government's Expenditures Exceeded Its Receipts, What Would It

question 17

Multiple Choice

If the government's expenditures exceeded its receipts, what would it most likely do?

• A) It would lend money to a bank or other financial intermediary.
• B) It would borrow money from a bank or other financial intermediary.
• C) It would directly buy bonds from the public.
• D) It would directly sell bonds to the public.

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher volatility than the market.

Correlation Coefficient

The correlation coefficient is a statistical measure that calculates the strength and direction of a linear relationship between two variables, ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation).

Portfolio Effect

The impact of diversifying investments across different assets, which can reduce risk without proportionately lowering expected returns.

Investment Decisions

Choices made by individuals or firms regarding the allocation of resources to different assets or projects with the expectation of earning a return.