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Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If businesses were willing to invest $30 at each possible level of GDP, the equilibrium level of GDP would be:
True Risk
The actual level of risk associated with an investment or decision, considering all factors including unknowable future events.
Systematic Risk Principle
Principle stating that the expected return on a risky asset depends only on that asset’s systematic risk.
Expected Return
The weighted average of all possible returns for an investment, with each return being weighted by its probability of occurrence.
CAPM
The Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets, particularly stocks.
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