If a Province Made an Illegal Activity Such as Gambling

question 30

Multiple Choice

If a province made an illegal activity such as gambling or prostitution legal,then,other things the same,what would happen to GDP?

• A) It would increase.
• B) It would decrease.
• C) It would not change because both legal and illegal production are included in GDP.
• D) It would not change because these activities are never included in GDP.

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Definitions:

Systematic Risk

The unavoidable risk associated with the whole market or a segment of it, referred to as market risk, that diversification cannot mitigate.

Chen, Roll, Ross

Refers to a model or theory in financial economics developed by the researchers Chen, Roll, and Ross, typically associated with their work on the arbitrage pricing theory or factor models.

Multifactor Models

Financial models that evaluate assets by taking into account multiple economic and statistical factors to explain market phenomena and asset returns.

Risk-free Rate

The anticipated earnings on an investment considered free from financial risk, usually related to sovereign bonds.