An Economic Recession in the U

question 53

Multiple Choice

An economic recession in the U.S. ______ the demand for exports from Canada resulting in a reduction in Canadian autonomous expenditures and a(n) ______ output gap in Canada.

• A) reduces; expansionary
• B) increases; expansionary
• C) reduces; recessionary
• D) increases; recessionary

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Definitions:

Efficient Market Hypothesis

A theory that suggests market prices fully reflect all available information, making it impossible to consistently achieve higher than average returns.

Random Walk

The hypothesis that stock market prices evolve according to a random path, making it impossible to consistently predict their future direction.

Index Funds

A type of mutual fund with a portfolio constructed to match or track the components of a financial market index, such as the S&P 500, aiming to offer broad market exposure, low operating expenses, and low portfolio turnover.

Moral Hazard

A situation where one party engages in risky behavior or fails to act in good faith because another party bears the consequences or costs.