In 2000, the S&P 500 Index Earned 11 Percent While

question 111

Multiple Choice

In 2000, the S&P 500 Index earned 11 percent while the T-bill yield was 4.4 percent. Given this information, which of the following statements is correct with respect to the market risk premium?

• A) The market risk premium must have been negative.
• B) The market risk premium must have been positive.
• C) The market risk premium must have been zero.
• D) Unable to answer without more information.

Understand the effects of price ceilings and price floors on market outcomes.

Analyze the impact of government subsidies on market prices, quantities, and the distribution of benefits between consumers and producers.

Understand the impact of a tax or subsidy on the selling price of a good and the net price paid by buyers.

Interpret graphical representations of market situations including the effects of various taxes and subsidies.

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Definitions:

Cystitis

An inflammation of the bladder, often caused by a bacterial infection.

Indwelling Urinary Catheter

A tube inserted into the bladder through the urethra to drain urine, remaining in place for extended periods.

Erythropoietin

A hormone produced by the kidneys that stimulates the production of red blood cells in response to falling levels of oxygen in the tissues.

Hormone

Biological molecules produced by glands that regulate bodily functions by carrying messages through the bloodstream to organs and tissues.