For Markets to Be in Equilibrium,that Is,for There to Be

question 71

Multiple Choice

For markets to be in equilibrium,that is,for there to be no strong pressure for prices to depart from their current levels,

• A) The past realized rate of return must be equal to the expected future rate of return; that is, .
• B) The required rate of return must equal the past realized rate of return; that is, r = .
• C) The expected rate of return must be equal to the required rate of return; that is, = r.
• D) All of the above statements must hold for equilibrium to exist; that is = r = .
• E) None of the above statements is correct.

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Definitions:

Surface Water

All bodies of water found on the Earth's surface, such as rivers, lakes, wetlands, and oceans, as opposed to groundwater.

Condenses

The process by which a substance changes from a gaseous state to a liquid state.

Low-pressure Cells

Areas in the Earth's atmosphere where the air pressure is lower than that of the surrounding regions, often associated with wet weather conditions.

Predominant Natural Vegetation

The most common type of wild plants growing in a particular region without human intervention.