The Inflation Surprise Is Defined as

question 32

Multiple Choice

The inflation surprise is defined as

• A)the sum of the natural rate of unemployment and the ideal inflation rate.
• B)the difference between the actual inflation rate and the expected inflation rate.
• C)the expected inflation rate in an economy multiplied by the population of the economy.
• D)the non-accelerating inflation rate of unemployment (NAIRU).

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Definitions:

Market Proxy

A stock market index or a similar benchmark used to represent the overall movement of the market.

Mean/Variance Efficient

Describes a portfolio that offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

CAPM

Stands for Capital Asset Pricing Model, a formula used to determine the expected return on an investment based on its risk relative to the market.

Multifactor Model

An investment model that evaluates securities by considering multiple economic factors to predict their risk and return.