The "Broken Window Fallacy

question 23

Multiple Choice

The "broken window fallacy"

• A)explains why inflation is so high.
• B)is a justification for the government to print more money.
• C)is illustrated when a government program is justified not on its merits but on the number of jobs it will create.
• D)has nothing to do with public policy.

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Definitions:

Intercept

In regression analysis, the constant term that represents the value of the dependent variable when all the independent variables are zero.

Alpha

In finance, a measure of performance on a risk-adjusted basis, calculating the excess return of an investment relative to the return of a benchmark index.

Regression Equation

An equation that describes the average relationship between a dependent variable and one or more explanatory variables.

Beta

A metric representing the instability or consistent risk involved in a security or portfolio relative to the entire market.