Which of the Following Statements Is FALSE

question 28

Multiple Choice

Which of the following statements is FALSE?

• A) The S&P 500 and the Wilshire 5000 indexes are both well-diversified indexes that roughly correspond to the market of U.S. stocks.
• B) Practitioners commonly use the S&P 500 as the market portfolio in the CAPM with the belief that this index is the market portfolio.
• C) Standard & Poor's Depository Receipts (SPDR, nicknamed "spider") trade on the American Stock Exchange and represent ownership in the S&P 500.
• D) The S&P 500 was the first widely publicized value weighted index and it has become a benchmark for professional investors.

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Definitions:

Full Employment GDP

Full Employment GDP is the output level produced by an economy when all its labor and resources are employed at their maximum efficiency.

Multiplier

refers to a factor by which an initial change in spending will ultimately change the total economic output more than the initial amount.

Multiplier

In economics, a factor by which an initial change in spending will alter total economic output due to follow-on effects.

Inflationary Gap

A situation where the total demand in an economy exceeds the total supply at the current price level, often leading to inflation.