SIE C.10.2

During which phase of the economic cycle would one most likely find monetary "inflation" starting to occur? A. Expansion B. Prosperity C. Recession D. Recovery

A

Gross Domestic Product is measured in: A. constant dollars B. inflated dollars C. dollars deflated by the gold standard D. dollars deflated by the sterling standard

A

If the federal funds rate has just risen to an all-time high, all of the following statements are true EXCEPT: A. long term interest rates have risen B. overnight loan rates from bank to bank are high C. the yield curve is flattening D. the Federal Reserve is pursuing a tight money policy

A

Inflation has been running at the annualized rate of 4%. You have just received a distribution from a mutual fund investment that has increased by 6%. Your purchasing power relating to this investment has: A. increased B. decreased C. stayed the same D. become more variable

A

Monetarist Theory states that the economy is stimulated by: A. the actions of the Federal Reserve B. increased Government spending C. tax rate reductions D. decreased Government spending

A

Open market operations of the Federal Reserve Board cause direct changes in: A. M1 levels B. velocity of money C. dollar exchange rate D. short term interest rates

A

The "real" interest rate earned on an investment is the stated interest rate: A. minus the inflation rate B. plus the inflation rate C. minus the T-Bill rate D. plus the T-Bill rate

A

What can the Federal Reserve do to stimulate the economy? A. Buy Treasury securities from banks B. Sell Treasury securities to banks C. Increase the reserve requirement D. Increase the margin requirement

A

Which of the following indicators are used SOLELY to measure investor sentiment? A. Put / Call Ratio B. DJIA C. Trading Volume D. S&P 500

A

Which tool of the Federal Reserve is used most frequently? A. Open market operations B. Discount rate C. Reserve requirements D. Margin on securities

A

After a period when prices have been rising rapidly, the Federal Reserve tightens credit and over a period of 2 years, the inflation rate falls from 4% to 2%. This is an example of: A. deflation B. depression C. recession D. disinflation

D

All of the following tools are used by the Federal Reserve to control the money supply EXCEPT: A. Setting reserve requirements B. Setting margin requirements C. Setting the discount rate D. Setting foreign exchange rates

D

Fiscal policy encompasses all of the following EXCEPT: A. government spending B. social security payment levels C. tax policy D. monetary policy

D

If the FOMC directs the Federal Reserve trading desk to tighten credit, which of the following will happen? A. The trading desk will engage in repurchase agreements with banks and cash reserves will be injected into the banking system B. The trading desk will engage in reverse repurchase agreements with banks and cash reserves will be injected into the banking system C. The trading desk will engage in repurchase agreements with banks and cash reserves will be drained from the banking system D. The trading desk will engage in reverse repurchase agreements with banks and cash reserves will be drained from the banking system

D

If the federal reserve tightens credit via open market operations, which of the following interest rates will likely NOT increase? A. Fed Funds Rate B. Discount Rate C. Broker Loan Rate D. Credit Card Interest Rates

D

Monetary policy is set by: A. Supreme Court decisions B. Congressional action C. Presidential edict D. Federal Reserve action

D

A review of major newspapers across the United States reveals that "help wanted" advertisement lineage has been decreasing. This is a: A. coincident indicator showing that economic activity is likely to increase B. coincident indicator showing that economic activity is currently at low levels C. leading indicator showing that economic activity is likely to be slowing down D. lagging indicator showing that economic activity has slumped

C

All of the following terms describe economic indicators EXCEPT: A. Leading B. Lagging C. Concomitant D. Coincident

C

During which phase of the economic cycle would one most likely find monetary "deflation" starting to occur? A. Expansion B. Prosperity C. Recession D. Recovery

C

If there is deflation, then: A. gold prices are likely to increase B. interest rates are likely to increase C. fixed income securities prices are likely to increase D. real estate prices are likely to increase

C

The interest rate charged from commercial banks to their best customers is the: A. Discount Rate B. Federal Funds Rate C. Broker Loan Rate D. Prime Rate

D

In a period of inflation, which of the following corporate actions is likely to occur? A. Issuers are more likely to sell preferred stock B. Issuers are more likely to call in outstanding bond issues C. Issuers are less likely to sell fixed income securities D. Issuers are less likely to add call features to any bonds issued

C

What is a function of the Federal Reserve? A. Setting the prime rate B. Setting bank lending standards C. Auditing broker-dealers operating on bank premises D. Auditing member banks

D

Over a period of 18 months, prices of goods and services decrease by 2%, and market interest rates decrease by 3%. This signals that the economy is in a period of: A. depression B. prosperity C. deflation D. recession

C

Over a period of 18 months, prices of goods and services increase by 4%, and market interest rates increase by 5%. This signals that the economy is in a period of: A. depression B. prosperity C. inflation D. recession

C

The usual order of the economic cycle is: A. expansion, recession, recovery, peak B. recession, recovery, peak, expansion C. expansion, peak, recession, recovery D. peak, recession, expansion, recovery

C

Which of the following interest rates is the highest? A. Discount Rate B. Federal Funds Rate C. Broker Loan Rate D. Prime Rate

D

Which of the choices given is a coincident economic indicator? A. Consumer Debt Levels B. Durable Goods Orders C. Index of Industrial Production D. Corporate Profits

C

Which of the following is NOT a component of M-2 ? A. Currency in Circulation B. Demand Deposits C. Certificates of Deposit over $100,000 D. Time Deposits

C

Which of the following is a leading economic indicator? A. Personal Income B. Employment Duration C. Labor Cost Per Manufactured Unit D. Contracts for plant and equipment

D

All of the following actions taken by the Fed would increase interest rates EXCEPT: A. reverse repurchase agreements B. buying securities from government dealers C. draining reserves from the money supply D. raising the discount rate

B

If a country is importing more, then that country's: A. GDP is increasing B. GDP is decreasing C. Inflation rate is increasing D. Inflation rate is decreasing

B

If the Federal Reserve is worried about rising unemployment due to weak economic growth, it would take a: A. hawkish tone B. dovish tone C. bullish tone D. bearish tone

B

Keynesian Theory states that the economy is stimulated by: A. the actions of the Federal Reserve B. increased Government spending C. decreased Government spending D. lowered tax rates

B

Supply Side Theory states that: A. increased government spending will stimulate the economy B. tax rate reductions and lower government spending will stimulate the economy C. the actions of the Federal Reserve are the driving force behind the economy D. tax rate increases will stimulate the economy

B

Which of the following is a lagging economic indicator? A. Index of Industrial Production B. Reported corporate profits C. Standard and Poor's 500 Index D. New consumer goods orders

B