Suppose There Are Only Two Goods (Good a and Good

question 95

Multiple Choice

Suppose there are only two goods (Good A and Good B) and the average person buys 4 of Good A in a year and 3 of Good B. If, in the base year, the Price of Good A is $5 and the Price of Good B is $10, and in the next year the Price of Good A is $6 and the Price of Good B is $9, the inflation that occurred in the second year is

• A)is 51%.
• B)is 100%.
• C)is 1%.
• D)is 2%.

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Definitions:

Funds

Financial assets or resources that are available for a specific purpose or investment.

Beta

A measure of a stock's volatility in relation to the overall market, indicating its risk level in comparison to the market average.

Expected Return

The weighted average of all possible returns, with weights equal to the probabilities of each outcome.

Equally-Weighted

An investment strategy where each security is assigned the same weight or importance in a portfolio, promoting diversification.