A Large Government Deficit Relative to GDP, a High Rate

question 13

Multiple Choice

A large government deficit relative to GDP, a high rate of money expansion accompanied by fixed exchange rates, along with substantial government expenditures are some of the common characteristics of _________ risk.

• A) exchange rate
• B) interest rate
• C) country
• D) investment

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Definitions:

Opportunity Cost

The value of the next best alternative forgone as the result of making a decision.

Production Alternative

Different ways in which a firm could allocate its resources to produce various goods or services.

Capital Goods

Physical assets used by a company to produce goods and services that are used to produce consumer goods or services.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.