Which of the Following Is True Given Various States of the Economy

question 52

Multiple Choice

Which of the following is true given various states of the economy?

• A) The various economic states of the economy are generally equally likely to occur in any given year
• B) Most stocks tend to have the same return regardless of the economic state
• C) The expected state of the economy can have a major impact on the expected return on a portfolio
• D) If the economy moves into a recession period from a normal period, all stocks will have lower expected returns
• E) A change in the probability of a state of the economy occurring has no impact on the expected return on a portfolio of risky assets

Recognize the importance of framing effects and mental accounting in influencing decisions.

Grasp the concept of loss aversion and its implications in economic behavior.

Understand the effectiveness of precommitments in overcoming self-control problems.

Understand the physiological basis of hunger and eating behaviors.

---

Definitions:

Lever Systems

Mechanisms in the body that utilize bones to create movements through the application of force against a fulcrum.

Orbicularis Oculi

A muscle encircling the eye socket, involved in closing the eyelids.

Crow's Feet

Fine lines and wrinkles that form around the outer corners of the eyes, often associated with aging or frequent exposure to sunlight.

Depressor Anguli Oris

A facial muscle associated with frowning, drawing the corners of the mouth downward.