An Expected Future Increase in the Price of Gasoline May

question 388

Multiple Choice

An expected future increase in the price of gasoline may

• A)increase the demand for gasoline now.
• B)decrease the demand for gasoline now.
• C)increase the supply of gasoline now.
• D)make gasoline an inferior good.

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Definitions:

Market Risk Premium

An additional expected return that investors demand for choosing to invest in the stock market over a risk-free investment, reflecting the extra risk assumed.

Average Stock

The average price of a company's stock over a specific period, which can indicate the stock's general trend.

Diversified Portfolio

An investment portfolio that contains a mix of assets (e.g., stocks, bonds, real estate) to reduce risk through diversification.

Market Portfolio

A portfolio consisting of all stocks.