During the Last Two Centuries, After Adjustment for Inflation

question 184

Multiple Choice

During the last two centuries, after adjustment for inflation,

• A) corporate bonds have yielded a real return of approximately 7 percent annually, compared to a real return of about 3 percent for corporate stocks.
• B) corporate stocks have yielded a real return of approximately 7 percent annually, compared to a real return of about 3 percent for bonds.
• C) both corporate stocks and bonds have yielded a real rate of return of about 3 percent.
• D) both corporate stocks and bonds have yielded a real rate of return of about 7 percent.

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Definitions:

Elasticity of Demand

A measure of how the quantity demanded of a good or service changes in response to a change in its price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a specified time period.

Elastic

describes a situation where the quantity demanded or supplied changes significantly in response to price changes.

Total Revenue

The entire amount of income generated by the sale of goods or services before any expenses are deducted.