The Purpose of the Ceteris Paribus Assumption Used in Economic

question 98

Multiple Choice

The purpose of the ceteris paribus assumption used in economic analysis is to

• A)avoid making normative statements.
• B)distinguish macroeconomics from microeconomics.
• C)make sure that all relevant factors are considered.
• D)focus on the effect of a single factor on a certain variable.

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Definitions:

Aggregate Supply

The total amount of goods and services that producers are willing and able to supply at a given overall price level in an economy.

Market Risk

Market risk, also known as systematic risk, refers to the potential for investors to experience losses due to factors that affect the overall performance of the financial markets.

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 indicates that the stock's price is more volatile than the market.

Volatile

Refers to the degree of variation in the price of a financial instrument over a period of time, indicating the level of risk associated with it.