For the US

question 43

Multiple Choice

For the U.S. economy, which of the following is the most important reason for the downward slope of the aggregate-demand curve?

• A)The wealth effect
• B)The interest-rate effect
• C)The exchange-rate effect
• D)The real-wage effect

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Definitions:

Portfolio Beta

A measure of the volatility, or systematic risk, of a portfolio in comparison to the market as a whole, indicating how sensitive the portfolio is to market movements.

Security Market Line

A line that represents the relationship between the risk of an investment and its expected return, used in capital asset pricing model (CAPM) to determine risk-adjusted returns.

Unsystematic Risk

The risk associated with a specific company or industry, also known as "diversifiable risk" or "idiosyncratic risk."

Expected Risk Premium

The additional return over the risk-free rate that investors demand to compensate for the risk of holding a risky asset.