In the National Income and Product Accounts, a Reduction of Inventories

question 29

Multiple Choice

In the national income and product accounts, a reduction of inventories counts as

• A)saving.
• B)positive investment.
• C)depreciation.
• D)consumption.
• E)negative investment.

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Definitions:

Risk Premium

Risk premium is the additional return an investor demands for holding a risky asset over a risk-free asset, compensating for the higher uncertainty.

Risk Premium

The extra return demanded by investors for taking on additional risk above the risk-free rate of return.

Asset Return

The income that an asset produces for its investor, measured as a percentage of the asset's purchase price.

Risk-free Rate

A theoretical return on an investment with zero risk, typically represented by treasury bills or government bonds.