Compute the Expected Return Given These Three Economic States, Their

question 62

Multiple Choice

Compute the expected return given these three economic states, their likelihoods, and the potential returns:
$$\begin{array}{l}\begin{array} { c c r } \text { Eccrorric State }&\text { Probability } & \text { Return } \\\text { fast growth }&0.1 & 50 \% \\\text {slow growth }&0.6 & 8\% \\\text { recession }&0.3 & - 10\%\end{array}\end{array}$$

• A) 6.8 percent
• B) 12.8 percent
• C) 16.0 percent
• D) 22.7 percent

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Definitions:

Progressive

A term often associated with ideas, policies, or efforts aimed at producing forward-looking change or improvements in society.

Shifted

Refers to the movement of a supply or demand curve in response to a change in factors other than the price of the good itself.

Excise Tax

A tax imposed on specific goods, services, or transactions, often with the goal of reducing consumption of certain products or generating revenue.

Government Expenditures

Spending by the government sector on goods and services, including infrastructure, public services, and transfer payments.