In the Long Run ________

question 3

Multiple Choice

In the long run ________.

• A)the aggregate supply is vertical with respect to unemployment
• B)the Phillips curve is vertical at a given level of expected inflation
• C)the economy reaches the potential output level consistent with the natural rate of unemployment
• D)all of the above
• E)none of the above

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Definitions:

Beta

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis, reflecting the opportunity cost of investment.

Capital Asset Pricing Model

A financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Capital Asset Pricing Model

The Capital Asset Pricing Model (CAPM) is a formula used to determine the expected return on an investment based on its risk relative to the market.