A Country That Has Many Well-Trained Macroeconomic Analysts Will Not

question 27

Multiple Choice

A country that has many well-trained macroeconomic analysts will not necessarily have more beneficial macroeconomic policies because

• A)economists' understanding of the economy remains poor.
• B)there are few ways in which economists' complex models can be applied to the real world.
• C)economists agree on so few government policies.
• D)economic policy is usually made by politicians,not economists.

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Definitions:

Arbitrage Opportunities

Situations where a financial instrument, or a combination of financial instruments, can be bought and sold simultaneously in different markets to profit from price discrepancies.

Risk-Free Rate

The return on investment with no risk of financial loss, often represented by the yield on government securities.

Nonsystematic Standard Deviation

A measure of variance in a portfolio's total returns attributable to factors specific to individual securities, as opposed to the market.

Equally-Weighted Portfolio

An equally-weighted portfolio is an investment strategy that gives the same weight, or importance, to each asset in the portfolio, regardless of the size or market value of the companies.