Scenario: Sarah Takes Care of Her Son Instead of Sending

question 39

Multiple Choice

Scenario: Sarah takes care of her son instead of sending him to a day care that charges $12,000 annually.
-Refer to the scenario above.Which of the following will happen if she puts him into a day care?

• A) The country's GDP will increase by $12,000.
• B) The country's GDP will remain unchanged.
• C) The country's GDP will decrease by $12,000.
• D) The country's trade deficit will increase by $12,000.

---

Definitions:

Efficient Frontier

A set of optimal portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return, used in modern portfolio theory.

Expected Return

The projected profitability of an investment over a given period.

Interest Rates

The expense associated with obtaining a loan, represented as a percentage of the total loan value, usually calculated on a yearly basis.

Short-Duration Bonds

Bonds with a relatively short time to maturity, typically less than five years, which are less sensitive to interest rate changes compared to longer-duration bonds.