Which of the Following Is an Example of a Positive

question 121

Multiple Choice

Which of the following is an example of a positive statement?

• A)Prices rise when the government prints too much money.
• B)If welfare payments increase, the world will be a better place.
• C)Inflation is more harmful to the economy than unemployment.
• D)The benefits to the economy of improved equity are greater than the costs of reduced efficiency.

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Definitions:

Reinvestment Rate Risk

The risk that the return on funds that are to be reinvested will not be at the same rate as the funds that were initially invested.

Zero Coupon Bond

A type of bond that does not pay periodic interest payments and is instead sold at a discount from its face value and matures at that face value.

Market Interest Rate

The prevailing rate of interest being offered on deposits and loans in the market, influencing how much borrowers pay and lenders earn.

Yield to Maturity

Yield to Maturity (YTM) is the total return anticipated on a bond if the bond is held until the date it matures, accounting for interest payments and principal recovery.