If Events Are , Diversification Will Not Reduce Risk

question 54

Multiple Choice

If events are , diversification will not reduce risk.

• A)positively correlated
• B)negatively correlated
• C)dependent
• D)independent

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Definitions:

Economic Policy

Actions taken by governments or central banks to influence the economy, including decisions on monetary policy, fiscal policy, and regulatory measures.

Recession

A sharp drop in the overall economic activities, enduring more than a couple of months, commonly reflected in key metrics including real GDP, real income, job numbers, output of the industrial sector, and transactions in the wholesale and retail markets.

Recessionary Gap

A situation where actual economic output is lower than the potential output, indicating underutilized resources and unemployment.

Potential GDP

The highest level of economic output that an economy can sustain over a long period without causing inflation.