Automatic Stabilizers Refer in Part to

question 132

Multiple Choice

Automatic stabilizers refer in part to

• A) the unemployment effects of recession.
• B) deficit- reduction policies.
• C) discretionary fiscal policies.
• D) government spending actions that automatically dampen the business cycle.

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Definitions:

Risk-free Rate

The return on an investment with zero risk, typically represented by the yield on government securities.

Capital Asset Pricing Model

A model that describes the relationship between systematic risk and expected return for assets, particularly stocks, used in finance to price risky securities.

William Sharpe

An economist who created the Sharpe Ratio, a measure to calculate risk-adjusted return.

SML (Security Market Line)

A line in the Capital Asset Pricing Model that shows the relationship between the expected return of a security and its risk.