A Primary Reason That Explains the Appreciation in the Value

question 159

Multiple Choice

A primary reason that explains the appreciation in the value of the U.S.dollar in the 1980s is

• A) large trade surpluses for the United States.
• B) relatively high inflation rates in the United States.
• C) lack of investor confidence in the U.S. monetary policy.
• D) relatively high interest rates in the United States.

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Definitions:

Capital Allocation Line

A line on a graph that shows the risk-reward ratio of different portfolios, helping investors understand their options for achieving a desired balance.

Risk-averse Investors

Investors who prefer to minimize uncertainty and potential loss in their investment choices, often opting for safer, more predictable investments.

Optimal Risky Portfolio

The combination of investments that provides the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

Expected Utility

A theory in economics that assesses the utility or satisfaction an agent expects to receive from different outcomes, taking into account their risk preferences.