A Rise in the Budget Deficit

question 206

Multiple Choice

A rise in the budget deficit

• A) shifts both the supply of loanable funds in the market for loanable funds and the supply of dollars in the market for foreign-currency exchange right.
• B) shifts both the supply of loanable funds in the market for loanable fund and the supply of dollars in the market for foreign-currency exchange left.
• C) shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange right.
• D) shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange left.

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Definitions:

Slope Coefficient

A measure that indicates the rate at which a dependent variable changes in relation to an independent variable, often used in linear regression analysis.

CAPM

Capital Asset Pricing Model, a theory that delineates the correlation between expected return on investments and the inherent systematic risk, especially in the context of equities.

Security Characteristic Line

Represents a regression line that displays the relationship between a security's returns and the market's returns, used to assess risk and performance.

Security Market Line

A representation of the capital asset pricing model (CAPM) which displays the expected return of a security as a function of its systematic, or non-diversifiable, risk.