A Common Assumption That Economists Make About the Behavior of Elected

question 152

Multiple Choice

A common assumption that economists make about the behavior of elected officials is that they try to

• A)maximize the size of their government salaries
• B)maximize the size of their control over the budget process
• C)maximize the number of votes they receive in the next election
• D)minimize the government's expenditures in order to balance the budget
• E)conform to the wishes of special interest groups so that the government behaves as a single, consistent decision maker

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Definitions:

Risk Exposure

The quantified potential for loss in an investment or portfolio, often due to market volatility, credit risk, or operational failures.

Short

A trading strategy that involves selling a security that one does not own, with the intention to buy it back at a lower price.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Underlying Asset

The financial instrument (e.g., stock, bond, commodity, or currency) on which a derivative instrument, such as an option or futures contract, is based.