Which of the Following Would Be Evidence That a Contractionary

question 41

Multiple Choice

Which of the following would be evidence that a contractionary gap exists?

• A)Rapid deflation during a period in which plant capacity utilization is below average.
• B)A steady price level and a 5 percent unemployment rate.
• C)Help wanted advertising lower than usual,and the consumer price index lower than expected.
• D)Inflation has risen markedly and the Dow Jones average is at record levels.
• E)The number of new unemployment claims has skyrocketed and the price level is rising.

Analyze the effects of changes in investor risk aversion on the market risk premium and the slope of the SML.

Describe the impact of the risk-free rate on stock and portfolio returns.

Distinguish between systematic (market) risk and unsystematic (diversifiable) risk.

Understand the Capital Asset Pricing Model (CAPM) and its applications to investment decisions.

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Definitions:

Treatments

Specific conditions applied to the participants or subjects in an experimental study.

Total

The sum of all values in a set of numbers.

Null Hypothesis

The default hypothesis that there is no significant difference or effect, serving as a starting point for statistical hypothesis testing.

P-value

The probability of observing test results at least as extreme as the results actually observed, under the assumption that the null hypothesis is correct.