The Expected Price Level Is Significant Because

question 129

Multiple Choice

The expected price level is significant because

• A)it is the equilibrium price level in the short run
• B)it determines the actual price level in the short run
• C)it determines the actual price level in the long run
• D)firms and resource owners make long-term agreements based on the expected price level
• E)the difference between the expected and actual price levels is equal to the actual inflation rate

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Definitions:

Initial Margin

The portion of the purchase price that an investor must deposit as collateral when buying on margin, to cover credit risk.

Rate of Return

The financial gain or loss encountered on an investment throughout a set period, calculated as a percentage of the investment’s initial outlay.

Bid-Asked Spread

The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for an asset.

Broker's Commissions

Fees or payments made to a broker for executing a transaction or providing specialized services.