As Their Relative Riskiness ________,The Expected Return on Corporate Bonds

question 65

Multiple Choice

As their relative riskiness ________,the expected return on corporate bonds ________ relative to the expected return on default-free bonds,everything else held constant.

• A)increases;increases
• B)increases;decreases
• C)decreases;decreases
• D)decreases;does not change

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Definitions:

Government Purchases

Expenditures made by the government for goods and services that affect the economy, including investments and spending on infrastructure, healthcare, and education.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, due to market price.

Price Floor

A government or regulatory-imposed minimum price for a particular good or service, above the equilibrium price.

Government Purchases

Expenditures by government entities on goods and services that are part of government consumption or investment.