Suppose There Was a Debate Regarding How to Spend $1

question 27

Multiple Choice

Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the centrist Democrat suggests an increase to infrastructure spending. Suppose the centrist Republican suggests an increase in cyber-defense spending. Each is arguing that their plan will get the most good for the money. What is going on here?

• A)Both are employing marginal analysis, just from different perspectives
• B)Only the Democrat is using marginal analysis.
• C)Only the Republican is using marginal analysis.
• D)Neither are using marginal analysis.

---

Definitions:

Beta

A measure of a stock's volatility in relation to the overall market, indicating the stock's risk profile.

Systematic Risk

A type of risk that is unavoidable and impacts the whole market or a particular sector, often called market risk or non-diversifiable risk.

Unsystematic Risk

The risk inherent to a specific company or industry, which can be mitigated through diversification of an investment portfolio.