The Figure Given Below Shows the Demand Curves [D₁ and D₂]

question 105

Multiple Choice

The figure given below shows the demand curves [D₁ and D₂] and the supply curve [S₁] of capital.Figure 17.1

-Shane holds wealth worth $10,000. He considers investing it equally in two gambles one of which has a probability of 0.6 to yield a return of 10% and the other has a probability of 0.4 to yield a return of 20%. What will be Shane's total expected return from the two gambles?

• A)$1,000
• B)$700
• C)$500
• D)$900
• E)$1,100

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Definitions:

Economic Inflation

A general increase in prices and fall in the purchasing value of money over time.

Buying Power

The ability of individuals or entities to purchase goods and services, often influenced by income levels, inflation, and market conditions.

Domestic Currency

The legal tender or currency that is circulated for use and accepted for exchange within the domestic economy of a country.

Dollarization

The process of a country adopting the US dollar as its primary currency, either officially or unofficially, alongside or in place of its own national currency.