In the Capital Asset Pricing Model,an Increase in Inflationary Expectations

question 97

Multiple Choice

In the capital asset pricing model,an increase in inflationary expectations will be reflected by

• A) a parallel shift downward in the security market line.
• B) a decrease in the slope of the security market line.
• C) an increase in the slope of the security market line.
• D) a parallel shift upward in the security market line.

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Definitions:

Payroll Tax

Duties levied on employees or the companies that employ them, computed as a percentage of the remuneration the employees are given.

Wages

The fixed regular payment, typically calculated on an hourly, daily, or piecework basis, made by an employer to an employee, especially to manual or unskilled workers.

Tax Burden

The total amount of tax paid by individuals or businesses, often expressed as a percentage of income or GDP.

Inelastic

Refers to a condition where the demand for a product or service changes very little when there is a change in its price.