Basic economics

A us based firm assembles electronic equipment using parts imported from singapore Sales 60m Wages 30m Parts 16m Expenses 46 m Net income 14m what is this firms contribution to the US GDP

44 million

an investor fears a coming recession she should probably invest in

Drug companies

measures a country output produced with in it's borders regardless of who is generating it

GDP

If the CPI is down but consumer demand is up the economy is likely in which stage of the business cycle

Trough to expansion as prices trend downward and consumer demand increases the economy is recovering from a trough to expansion

the contraction phase of the buisness cycle is least likely accompanied by decreasing

Unemployment

the US balance of payments deficit would decrease in all the of the following except

a decrease in purchases of US securities by foreign investors

a bond analyst is plotting a yield curve and notices that the short term maturities have higher yields than intermediate and long term maturities this is an example of

an inverted yield curve

occurs when government expenditures exceed tax revenues

budget deficit

occurs when government tax revenue exceeds expenditures

budget surplus

the index for all items less food and energy is often referred to as

core cpi

when the business cycle is in the recovery stage what type of industry tends to perform the best

cyclical

Highly sensitive to business cycles and inflation trends these industries produce durable goods such as heavy equipment, machinery, and automobiles

cyclical industries

The least affected by normal business cycles produce nondurable goods such as food, pharmaceuticals, tobacco, and energy

defense industries

if the yield spread between corporate bonds and government bonds has narrowed a _________ is expected

expansion

refers to a goverment's use of spending and taxation to influence economic activity the budget is said to be balanced when tax revenues equal government spending

fiscal policy

the federal reserve has nothing to do with _________

fiscal policy

if inflation increases and interest rates go up then bond prices _____ and yield ______

go down go up

when the yield curve is normal long term interest rates are ____ than short term

higher upward sloping

an upward sloping yield curve represents which of the following

inflation expectations

this is a concept that the rate of inflation does not immediately react to unexpected changes in the economic conditions rather it lags behind sometimes for several quarters

inflation inertia

the cost of borrowing money

interest rates

an inverted yield curve predicts

interest rates have rapidly risen

the conference board has released information indicating an increase in the Help Wanted Index most anaylist would say this is

likely a wage inflation in the future

refers to the central bank's actions that affect the quantity of money and credit in an economy in order to influence economic activity

monetary policy

a flat yield curve occurs when

no change in interest rates are expected

the actual rate of interest a borrower pays on the borrowed money

nominal rate

A normal ascending yield curve occurs during

periods of economic expansion

the fiscal policy budget is presented by ___________ and approved by ________

president congress

This rate is not set by the Fed but is the most preferential interest rate on corporate loans at large US money center commercial banks

prime rate

if the yield spread between corporate bonds and government bonds is widening a _________ is expected

recession

core inflation is best described as an inflation rate

that excludes certain volatile goods prices

fiscal policy of the US is determined by

the president and congress through the process of budgeting and taxation

an inverted or descending yield curve occirs when the Federal Reserve Board has

tightened credit in an overheated economy

the business cycle includes all the following except

waves