If the MPC in the Economy Is

question 42

True/False

If the MPC in the economy is .75,government could shift the aggregate demand curve rightward by $30 billion by cutting taxes by $10 billion.

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Definitions:

Market Risk Premium

The difference between the expected return on a market portfolio and the risk-free rate.

Risk Aversion

The preference for lower risk options over higher risk ones, even if the latter could result in higher returns.

Security Market Line

A representation in finance that shows the expected return of investments at different levels of risk, based on the capital asset pricing model (CAPM).

Beta

A gauge of the variability of a stock's value relative to the comprehensive market.