If the Economy Is at Point a in the Phillips

question 111

Multiple Choice

If the economy is at point A in the Phillips curve graph shown, what prediction would you make for unemployment in the long run?

• A)It will increase.
• B)It will decrease.
• C)It will remain constant.
• D)It will explode.

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Definitions:

Pure Play Method

An approach in finance where investments are made in companies that specialize in a single line of business or sector to achieve specific exposure.

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 means the stock is more volatile than the market, while below 1 means less.

NPV

Net Present Value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Cost Of Capital

The rate of profit a company should generate from its investments to preserve its value in the market and appeal to investors.