Exhibit 7.12 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 18

Multiple Choice

Exhibit 7.12
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Given the following weights and expected security returns, calculate the expected return for the portfolio.

• A)0.085
• B)0.090
• C)0.092
• D)0.097
• E)None of the above

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Definitions:

Surpluses

Occurs when the quantity of a good produced exceeds the quantity demanded, often leading to price reductions.

Inflationary Gap

A situation where the demand for goods exceeds supply at the current price levels, leading to an increase in prices and inflation.

Equilibrium GDP

The level of Gross Domestic Product where the aggregate supply equals aggregate demand within an economy, leading to a stable economic condition.

Full Employment GDP

The level of GDP produced when the economy is utilizing all available resources, including labor, at the maximum sustainable rate without causing inflation.