A Decline in Expected Future Output Would Cause the IS

question 9

Multiple Choice

A decline in expected future output would cause the IS curve to

• A)shift up and to the right.
• B)shift down and to the left.
• C)remain unchanged.
• D)shift up and to the right only if people face borrowing constraints.

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Definitions:

Betas

Measures the volatility of a stock or portfolio in relation to the overall market, indicating the level of risk associated with the investment.

Diversifiable Risk

A type of investment risk that can be reduced or eliminated in a portfolio through diversification, unlike systemic risk.

Market Risk

The risk of losses in financial markets due to factors such as market volatility, interest rate changes, and economic downturns that affect the entire market.

Required Return

The minimum return that investors expect or demand for an investment to be worth it, considering its risk level.