In Periods When Prices Are Falling, on Average

question 247

Multiple Choice

In periods when prices are falling, on average,

• A)real GDP will grow slower than nominal GDP.
• B)real GDP will grow faster than nominal GDP.
• C)real GDP will grow as fast as nominal GDP.
• D)real GDP will certainly be lower than nominal GDP.
• E)real GDP cannot be calculated.

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Definitions:

Long-Short Hedge Fund

An investment fund strategy that aims to generate returns by taking long positions in undervalued securities and short positions in overvalued securities.

Short Selling

The practice of selling securities or other financial instruments that are not currently owned, and subsequently repurchasing them at a lower price.

Market Neutral

An investment strategy that seeks to avoid some forms of market risk by taking offsetting positions in different securities, aiming for a net market exposure of zero.

Government Regulation

The act of controlling business behavior through a set of rules or laws set forth by the government to achieve outcomes that might not be achieved through free markets.