Unit 8 Quizzes

Interest rates are declining. An analyst would be most likely to state that the business cycle is in which stage?

Contraction

Which of the following is a NOT a leading economic indicator?

Duration of unemployment

Gross Domestic Product (GDP) is increasing. Real interest rates are relatively high. Consumer sentiment is strong, as are auto and retail sales. Labor productivity is declining. What state of the business cycle is the economy likely experiencing?

Expansion to peak

Which term refers to the taxation, expenditures, and debt management of the federal government? (Taxes and Expenses)

Fiscal Policy

Which of the following statements about the Consumer Price Index (CPI) is NOT true?

The CPI measures the increase or decrease in the level of consumer prices with respect to the level of wholesale prices on which consumer prices depend.

Which of the following statements about the consumer price index (CPI) is NOT true?

The CPI measures the increase or decrease in the level of consumer prices with respect to the level of wholesale prices upon which consumer prices depend.

Stock market indices have a variety of uses. Which of the following is least accurate regarding the use of stock market indices?

They are a lagging indicator of an economy's corporate performance.

If the U.S. dollar has been appreciating against foreign currencies, all of the following statements are true EXCEPT

U.S. exports become more competitive

A significant increase in the importing of goods into the United States would likely have what effect on the strength of the U.S. dollar?

Weaken

An investment strategy that is designed to minimize risk and preserve the investor's principal is

a defensive investment strategy

To determine the amount of change in the GDP from 1 year to another, both years' GDP should be converted into

constant dollars

If the yield curve is positive (sloping upward), this means that long-term interest rates are

higher than short-term rates

During an economic downturn, one would expect to see

higher unemployment

If the U.S. dollar is devalued relative to other world currencies, which of the following will occur with respect to the prices of goods? i U.S. exports will be more price-competitive overseas. ii U.S. exports will be less price-competitive overseas. iii Foreign imported goods will be more price-competitive with ours. iv Foreign imported goods will be less price-competitive with ours.

i and iv

Which of the following statements regarding the economics of fixed-income securities are TRUE? i Short-term interest rates are more volatile than long-term rates. ii Long-term interest rates are more volatile than short-term rates. iii Short-term bond prices react more than long-term bond prices given a change in interest rates. iv Long-term bond prices react more than short-term bond prices given a change in interest rates.

i and iv

An inverted yield curve results in part by

investors buying long-term bonds and selling short-term bonds

A business reporter claims that we are suffering from inertial inflation. This means

the current rate of inflation will remain at this level until economic shocks cause it to change.

When a bank that is a member of the Federal Reserve System borrows from another member bank, the rate that is charged is known as

the federal funds rate