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
