Compute the Expected Return Given These Three Economic States, Their

question 57

Multiple Choice

Compute the expected return given these three economic states, their likelihoods, and the potential returns: $$\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Economic } \\\text { State }\end{array} & \text { Probability } & \text { Return } \\\hline \text { Fast Growth } & 0.2 & 23 \% \\\hline \text { Slow Growth } & 0.6 & 14 \% \\\hline \text { Recession } & 0.2 & - 30 \% \\\hline\end{array}$$

• A)3.5 percent
• B)7.0 percent
• C)7.5 percent
• D)12.5 percent

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Definitions:

Government Policies

Government policies are the actions and strategies that governments implement to achieve specific objectives, including economic stability, growth, and social welfare.

Efficiency

The ability to achieve a desired result without wasted energy or resources.

Quantity of Money

The sum of cash and bank deposits circulating in an economy at a particular moment.

Prices

Prices are the amounts of money required to purchase goods or services, serving as a reflection of supply and demand dynamics in a market.