Inflation Can Be Caused

question 28

Multiple Choice

Inflation can be caused:

• A)only by increases in aggregate demand.
• B)only by increases in aggregate supply.
• C)only by decreases in aggregate supply.
• D)by increases in aggregate supply or decreases in aggregate demand.
• E)by increases in aggregate demand or decreases in aggregate supply.

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Definitions:

Security's Beta

A measure of an investment's volatility compared to the market as a whole, indicating its risk in relation to the market.

Risk Premium

The extra return expected from an investment for taking on additional risk.

Security Market Line

A graphical representation of the expected return of an asset compared to its risk, as measured by beta.

Systematic Risk

The risk inherent to the entire market or an entire market segment, which cannot be eliminated through diversification.