A Sub-Discipline of Economics That Looks at the Economy as a Whole

question 188

Multiple Choice

A sub-discipline of economics that looks at the economy as a whole is:

• A) macroeconomics.
• B) microeconomics.
• C) positive economics.
• D) normative economics.
• E) impossible to model.

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Definitions:

Diversification

The process of allocating investments across various financial assets to reduce the risk exposure of a portfolio.

One-Factor APT

The Arbitrage Pricing Theory that describes the expected return of a financial asset in relation to a single systematic risk factor.

Factor Portfolio

An investment portfolio constructed to have a high sensitivity to certain risk factors, aiming to achieve specific investment outcomes.

Unsystematic Risk

The risk associated with a specific issuer of a security, such as a company's management decisions or financial health, distinct from market-wide risks.