When the Population Increases with No Change in Labor Productivity

question 257

Multiple Choice

When the population increases with no change in labor productivity, employment ________ and potential GDP ________.

• A) decreases; decreases
• B) increases; increases
• C) decreases; increases
• D) increases; decreases

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Definitions:

Beta

A means to compare the stability and risk factor of a security or portfolio relative to the market as a whole.

SML (Security Market Line)

A line that represents the expected return of an investment as a function of its risk, with the risk measured by the investment's beta.

Zero-investment Portfolio

A portfolio that is constructed without requiring any initial capital, typically by taking long and short positions that offset each other.

Short and Long Positions

Short positions involve selling securities not owned with the hope of buying them back at a lower price, while long positions involve buying securities with the expectation that they will increase in value.