As a Result of the Following Trades - Buy 10

question 49

Multiple Choice

As a result of the following trades - buy 10 Dec 2015 BAB futures, buy 10 Mar 2016 BAB futures, sell 10 Jun 2016 BAB futures and sell 10 Dec 2015 BAB futures - the trader's position is as follows:

• A)long 10 Dec 2015 BAB futures
• B)short 10 Dec 2015 BAB futures
• C)no position, they have closed out
• D)long 10 Mar 2016 BAB futures and short 10 Jun 2016 BAB futures
• E)short 10 Mar 2016 futures and long 10 Jun 2016 BAB futures.

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Definitions:

Potential Output

The highest level of real GDP that an economy can achieve when it is operating at full capacity, without causing inflation.

Recessionary Gap

A situation where an economy's real GDP is lower than its potential GDP, leading to underutilized resources and higher unemployment.

Potential Output

The maximum amount of goods and services an economy can produce when it is using all of its resources efficiently.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable, often due to market failure or intervention.