One of the Most Basic Models of the Economy Is

question 40

Multiple Choice

One of the most basic models of the economy is:

• A) real GDP per capita.
• B) the current population survey.
• C) consumer expenditure.
• D) the circular flow diagram.

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Definitions:

Hedging

A strategy used to offset potential losses or gains that may be incurred by a companion investment.

Economic Exposure

The risk that a company's cash flow, foreign investments, or earnings may suffer as a result of fluctuating exchange rates.

Derivative Security

A financial instrument whose value is based on the value of an underlying asset, such as stocks, bonds, commodities, or market indexes.

American Put Option

A put option that gives the holder the right to sell an asset at a specified price anytime before the expiration date.