9-52 the Error from Using Duration to Estimate the New

question 53

True/False

9-52 The error from using duration to estimate the new price of a fixed-income security will be less as the amount of convexity increases.

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Definitions:

Equilibrium Real National Output

The level of output where aggregate supply equals aggregate demand in an economy, adjusted for inflation.

Inventories

Goods that have been produced but remain unsold.

Production

The process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (the output).

Keynes

refers to John Maynard Keynes, a British economist whose theories on the causes of prolonged unemployment and recommendations for government intervention in economies to stimulate demand and control inflation have had a significant influence on modern macroeconomics.