Unit 6

When investors tend to increase their investments in debt securities on the short end of the spectrum it generally leads to

positive yield curve

Proponents of the concept of inflation inertia believe that

prices will rise slowly and then begin to increase at a faster rate

With respect to the fiscal policy of the US, the annual budget request is submitted by the

President

Some prominent stock market pundits are predicting that the economy will slide into a recession in the near future. Furthermore they are expecting moderate deflation during the same period. If this were to happen, your clients would probably enjoy the greatest overall return from investing in

US treasury bonds

A fixed income investor notices that the short, intermediate, and long ends of the yield curve reflect a similar return. This would be typical of

A flat yield curve

An investor using yield curve analysis would expect to view bonds of

A single issuer over varying maturities

The research department of an investment advisory firm forecasts that the current business cycle should reach its peak within the next two months. Under such circumstances which of the following portfolio adjustments would be most suitable for the firms customers who actively invest in common stocks

Defensive stocks

When the value of the US dollar decreases

Domestic manufacturers will likely increase their exports

To stimulate a sluggish economy using fiscal policy measures policymakers would

Reduce income taxes

All of the following are tools that may be employed by the federal reserve in an effort to control the economy EXCEPT

The prime rate

A recession is defined as a drop in GDP for

Two consecutive quarters

A decrease in the value of the monetary unit is just a way of defining

inflation