Series 65: Unit 6 Quiz 2

A bond analyst notices that the yield spread between corporate bonds and government bonds is widening. This is typically predictive of A. increasing interest rates. B. an expanding economy. C. an economic slowdown. D. increased concern over the national debt.

An economic slowdown

When a bank's reserve account is running low, it might choose to borrow from the Fed. When doing so, the bank will be charged A. the prime rate. B. the call loan rate. C. the discount rate. D. the federal funds rate.

The discount rate

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 A. the federal funds rate. B. the call loan rate. C. the discount rate. D. the prime rate.

The federal funds rate

Economists have determined that the economy is slowing down. Orders for durable goods have been declining and unemployment, while not a reason for concern, has been steadily increasing over the past year. Given the information provided, what phase of the business cycle is the economy currently experiencing? A. Contraction B. Deflation C. Trough D. Expansion

Contraction

If the Consumer Price Index (CPI) is up and consumer demand is also up, the economy is likely in which stage of the business cycle? A. Contraction to trough B. Recovery to trough C. Expansion to peak D. Peak to contraction

Expansion to peak

If the value of the U.S. dollar increases against other currencies, which of the following are true? 1. U.S. exports are more competitive in foreign countries. 2. U.S. exports are less competitive in foreign countries. 3. Foreign imports into the United States are more competitive in U.S. markets. 4. Foreign imports into the United States are less competitive in U.S. markets.

U.S. exports are less competitive in foreign countries and foreign imports into the USA are more competitive in U.S. markets

XYZ Aircraft Manufacturing Corporation, based in the United States, announces a multibillion-dollar order for its new jumbo jet from Fly Airlines, a Japanese-based carrier. When the sale is completed, there will be A. no effect on the balance of trade. B. a credit to the current account of the United States. C. a debit to the current account of the United States. D. a credit to the current account of Japan.

A credit to the current account of the United States

Which of these is a definition of inflation? A. A decrease in consumer demand B. An increase in purchasing power C. An increase in the value of the dollar D. A decrease in the value of the monetary unit

A decrease in the value of the monetary unit

An investment strategy that is designed to minimize risk and preserve the investor's principal is A. an aggressive investment strategy. B. a defensive investment strategy. C. a growth investment strategy. D. a market capitalization investment strategy.

A defensive investment strategy

Which of the following statements best describes what will happen when the value of the American dollar rises in relation to foreign currencies? A. Shares of foreign stock will be worth more in terms of American dollars. B. Foreign goods and services will become more expensive for Americans. C. The risk of stagflation will increase. D. Foreign goods and services will become less expensive for Americans.

Foreign goods and services will become less expensive for Americans

Which of the following is a coincident economic indicator? A. Machine tool orders B. Agricultural employment C. Industrial production D. Stock market prices as measured by the S&P 500

Industrial production

Ana is a bond analyst who notices a wider credit spread between Treasury bonds and AAA corporate debt. From this, she would be most likely to infer A. the economy is weakening. B. corporate earnings are reaching record highs. C. interest rates on Treasury bonds are increasing. D. corporate bond prices are increasing.

The economy is weakening