An Increase in Government Spending Initially and Primarily Shifts Which

question 70

Multiple Choice

An increase in government spending initially and primarily shifts which curve in what direction?

• A) aggregate demand to the right
• B) aggregate demand to the left
• C) aggregate supply to the right
• D) aggregate supply to the left

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Definitions:

Market Risk Premium

The Market Risk Premium is the additional return an investor expects from holding a risky market portfolio instead of risk-free assets.

Beta

Beta measures the volatility of an investment relative to the market as a whole, indicating how much an investment's price is likely to move in relation to market changes.

Risk-Free Rate

The Risk-Free Rate is the theoretical rate of return on an investment with zero risk, typically represented by the yield on government securities like U.S. Treasury bills.

Market Risk Premium

The additional return expected by investors for taking on the increased risk of investing in the stock market over a risk-free investment.