Bond Ratings Measure a Bond's Credit Risk

question 22

True/False

Bond ratings measure a bond's credit risk.

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Definitions:

Expansionary Gap

A situation in macroeconomics where the real GDP is higher than the potential GDP, leading to inflationary pressures.

Resource Prices

The costs associated with acquiring the inputs needed for production, such as raw materials, labor, and capital.

Short Run

A period in economics during which at least one input, for example, capital or labor, is considered fixed in quantity, while other inputs can be varied to adjust production levels.

Price Level

The mean of current costs for a wide range of goods and services within the economy, indicative of either inflation or deflation.