Other Things Held Constant,if the Expected Inflation Rate Decreases and Investors

question 124

Multiple Choice

Other things held constant,if the expected inflation rate decreases and investors also become more risk averse,the Security Market Line would be affected as follows:

• A) The y-axis intercept would decline,and the slope would increase.
• B) The x-axis intercept would decline,and the slope would increase.
• C) The y-axis intercept would increase,and the slope would decline.
• D) The SML would be affected only if betas changed.
• E) Both the y-axis intercept and the slope would increase,leading to higher required returns.

Analyze the effectiveness of monetary and fiscal policies in response to recessions and economic downswings.

Understand how changes in money holdings affect interest rates.

Analyze the impact of fiscal and monetary policy on aggregate demand and output.

Calculate the effect of fiscal and monetary actions using the concept of the multiplier.

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Definitions:

Lac Operon

A group of genes with a single promoter that are involved in the transport and metabolism of lactose in bacteria and regulated together.

Escherichia Coli

A species of bacteria found in the intestines of animals and humans; some strains can cause food poisoning.

Glucose

A simple sugar that is an important source of energy in living organisms and is a component of many carbohydrates.

SRY Gene

The SRY gene is a sex-determining gene on the Y chromosome that triggers male development in most mammals, including humans.