Consider a Simple Macro Model with Government and Foreign Trade

question 41

Multiple Choice

Consider a simple macro model with government and foreign trade and where the price level is taken as given.The simple multiplier is equal to

• A)1/(1 - MPC).
• B)1/MPC.
• C)1/(1- MPS - t).
• D)1/(1 - (MPC(1 - t)- m )).
• E)1/(1- (MPS(1 - t)- m )).

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Definitions:

Portfolio's Sigma

A statistical term that represents the standard deviation of returns of an investment portfolio, reflecting its risk.

Mean-Variance Efficient Portfolio

A portfolio construction theory that suggests the best investment portfolio is one that offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

Single-Index Structure

A portfolio model that relates the returns on each asset to a single market index.

Sensitivity Coefficients

Measurements that indicate how much the output of a mathematical model or system can change in response to changes in its inputs.