Consider an Economy with a Relatively Steep AS Curve

question 63

Multiple Choice

Consider an economy with a relatively steep AS curve.If there is a shift to the right in the AD curve,there will be a ________ in the price level and ________ in national output.

• A)small increase; a large increase
• B)small increase; a large decrease
• C)large increase; a small increase
• D)large increase; a small decrease
• E)large increase; no change

Identify arbitrage opportunities by comparing the expected returns and the actual returns of portfolios.

Understand the implications of market beta, SMB beta, and HML beta on stock returns.

Analyze the difference in expected returns between the single factor model and the Fama-French Three Factor Model.

Calculate the expected return of a well-diversified portfolio using both single and multifactor models.

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Definitions:

Arbitration

A form of dispute resolution where an impartial third party, the arbitrator, makes a decision on a dispute outside the court system.

Arbitrator

A neutral third party who resolves disputes between two other parties, making decisions that are usually binding.

Unionization

The process of organizing the employees of a company into a labor union to negotiate wages, working conditions, and other employment terms.

Union-Management Negotiation

The process in which labor union representatives and company management discuss and agree on workplace conditions, wages, and policies.