Studies Indicate That the Vanguard 500 Index Fund Tends To

question 5

Multiple Choice

Studies indicate that the Vanguard 500 Index fund tends to:

• A)underperform most professional money managers.
• B)produce a return equal to that of professional managers.
• C)outperform the average professional money manager, but only over the short term.
• D)outperform most professional money managers especially over longer periods of time.
• E)support the argument that the stock market is inefficient.

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Definitions:

Outward Shift

An increase in the production capacity of an economy, often represented as an outward movement on a graph.

Production Possibilities Curve

A graph that depicts the maximum output of two goods that can be produced with available resources and technology, assuming all resources are fully utilized.

Tax Policy

The government's approach to taxation, which includes the determination of tax rates and the identification of what economic activities or transactions will be taxed.

Production Possibilities Curve

A graphical representation showing the maximum combination of goods and services that can be produced using all available resources efficiently.