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Level III
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Capital Market Expectations
Capital Market Expectations
Medium
A major earthquake destroys significant industrial capacity in a developed economy. According to the CFA curriculum, the most likely impact on economic growth is:
A
Negative in the short run due to destruction of productive capacity, but potentially positive in the long run if rebuilding incorporates more efficient technology
B
Negative in both the short and long run because productive capacity is permanently lost
C
Positive in both the short and long run due to the stimulus effect of reconstruction spending
D
Neutral because insurance payments fully offset the economic losses
Select an answer to continue
Tags
#natural-disasters
#exogenous-shocks
#creative-destruction
#trend-growth
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