What Is the Effect on a Normal Product If Income

question 60

Multiple Choice

What is the effect on a normal product if income increases?

• A)It will cause an increase in the quantity demanded.
• B)It will cause an increase in demand.
• C)It will cause a decrease in demand.
• D)It will cause an increase in supply.
• E)It will cause a decrease in supply.

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Definitions:

Security Market Line

A line that represents the relationship between the expected return of an investment and its risk as measured by beta.

Underpriced Security

A financial security that is selling for a price believed to be below its true value or potential market price, presenting a buying opportunity.

Market Portfolio

A portfolio consisting of a mix of all available investments in the market, weighted by market value, which represents the entire stock market or a particular segment of it.

Risk Aversion

The tendency of investors to avoid unnecessary risk, preferring safer investments over riskier ones for the same expected return.