Examples of Events That Increase Risk Aversion Include

question 85

Multiple Choice

Examples of events that increase risk aversion include

• A) a stock market crash.
• B) assassination of a key political leader.
• C) the outbreak of war.
• D) all of the above.

---

Definitions:

Expansionary Gap

A situation in macroeconomics where the actual output in an economy exceeds the potential output, traditionally leading to inflation.

Actual Price Level

The current market prices of goods and services, reflecting the real value of money and the purchasing power of consumers.

Recessionary Gap

The difference between real GDP when the economy is in a recession and the GDP at full employment, indicating underutilized resources.

Expected Price Level

The anticipated average cost of goods and services in the future, based on current trends, policies, and economic conditions.