Deck 19: Global Economic Activity and Industry Analysis

Question 1

The U.S.makes up approximately what percent of the global equity market capitalization?

A) 20%
B) 25%
C) 30%
D) 35%
E) 40%

Answer 1

C

Question 2

It has been estimated that "substitution effects" underestimate the Consumer Price Index by approximately how much?

A) 3%
B) 2.5%
C) 1.75%
D) 1.0%
E) 0.5%

Answer 2

D

Question 3

The relationship between inflation and real GDP is ________.

A) direct
B) positive
C) negative
D) non-existent
E) inverse

Answer 3

E

Question 4

The labor force divided by the nonmilitary working age population equals the ________.

A) work force participation rate
B) employable participation rate
C) labor population participation rate
D) labor force participation rate
E) participating employees rate

Question 5

The relationship between GDP and market capitalization for the leading economies of the world is generally ________.

A) weakly related
B) inversely related
C) negatively correlated
D) positively correlated
E) unrelated

Question 6

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

A) stock prices
B) M2 money supply
C) industrial production
D) interest rate spread
E) consumer expectations index

Question 7

Which of the following reflects the dollar value of economic output in terms of the current year?

A) current year GDP
B) real GDP
C) nominal GDP
D) adjusted GDP
E) actual GDP

Question 8

Which of the following combinations describes a "goldilocks" scenario?

A) slow income growth, low unemployment and low inflation
B) rapid income growth, high unemployment and low inflation
C) rapid income growth, low unemployment and low inflation
D) rapid income growth, low unemployment and high inflation
E) rapid income growth, high unemployment and high inflation

Question 9

Which of the following is not listed as a cause of increased integration of economies around the world?

A) increased technology
B) increased international travel
C) improved supply chain logistic
D) reduced trade barriers
E) none of these

Question 10

All nonmilitary people employed and unemployed,but seeking employment make up the ________.

A) labor force
B) labor population
C) employable population
D) work force participants
E) employable work force

Question 11

Which index measures the average prices paid by urban consumers for a basket of consumer goods and services?

A) Urban Inflation Index (UII)
B) Price Inflation Index (PII)
C) Urban Consumer Index (UCI)
D) Consumer Inflation Index (CII)
E) Consumer Price Index (CPI)

Question 12

If the number of Euros required to buy $1 (USD)decreases then the Euro has ________ versus the U.S.dollar.

A) depreciated
B) appreciated
C) declined
D) improved
E) increased

Question 13

In the U.S.,what percentage of the GDP is consumer spending?

A) 45%
B) 55%
C) 65%
D) 75%
E) 85%

Question 14

Which of the following reflects the value of economic output adjusted to remove the effects of inflation?

A) current year GDP
B) real GDP
C) nominal GDP
D) adjusted GDP
E) actual GDP

Question 15

If the number of Euros required to buy $1 (USD)increases then the Euro has ________ versus the U.S.dollar.

A) depreciated
B) appreciated
C) declined
D) improved
E) increased

Question 16

Economic metrics that tend to rise and fall in advance of the economy are called ________ indicators.

A) predictive
B) forecast
C) leading
D) coincident
E) cyclical

Question 17

Which one of the following is defined as the market value of goods and services produced over a period of time?

A) Domestic Market Product (DMP)
B) Gross Domestic Product (GDP)
C) Gross Economic Activity (GEA)
D) Gross Market Value (GMV)
E) Market Value Product (MVP)

Question 18

Which of the following is NOT one of the four stages of the business cycle?

A) boom
B) peak
C) contraction
D) trough
E) expansion

Question 19

Which of the following is NOT considered in the first filter or phase of top-down analysis?

A) Domestic spending
B) Fiscal policy
C) Business cycles
D) Monetary Policy
E) Economic indicators

Question 20

Which of the following is NOT considered a lagging economic indicator?

A) prime rate
B) change in CPI for services
C) industrial production
D) commercial and industrial loans

Question 21

Which of the following is NOT one of Michael Porter's Five Forces?

A) threat of new entrants
B) bargaining power of buyers
C) bargaining power of suppliers
D) threat of new technology
E) threat of substitute products

Question 22

Which sector has a high sensitivity to the business cycle?

A) defensive
B) offensive
C) lagging
D) cyclical
E) leading

Question 23

Which one of the following is not one of the elements in the industry life cycle?

A) start-up
B) rapid growth
C) consolidation
D) maturity
E) relative decline

Question 24

If government expenditures exceed tax revenue the resulting shortfall is termed a ________.

A) budget shortfall
B) taxing deficiency
C) budget deficit
D) revenue shortfall
E) revenue deficiency

Question 25

Which of the following was the largest sector in the S&P as of April 2012?

A) consumer discretionary
B) energy
C) health care
D) technology
E) financials

Question 26

The power of a "rippling effect" of adding money to the financial system is measured by the ________.

A) ripple ratio
B) money multiplier
C) multiplier ratio
D) money magnifier
E) magnifier ratio

Question 27

Which of the following describes the "M2" Money Supply?

A) M1 plus time deposits, savings accounts and money markets
B) M1 plus time deposits and savings accounts
C) M1 plus time deposits and money markets
D) M1 plus money markets
E) M1 plus checking and time deposits

Question 28

A common rule of thumb on Wall Street says that the sum of the inflation rate plus the market price-earnings ratio equals ________.

A) 10
B) 15
C) 20
D) 25
E) 30

Question 29

A breakdown of the S&P 500 into major sectors specifying the relative market weight of components is called a ________.

A) heat map
B) sector chart
C) component map
D) market capitalization chart
E) sector component map

Question 30

Which sector has a low sensitivity to the business cycle?

A) defensive
B) offensive
C) lagging
D) cyclical
E) leading

Question 31

The process of moving investments between sectors of the economy over time is called ________.

A) sector stagnation
B) sector selection
C) rotational investing
D) sector exchange
E) sector swapping

Question 32

The so-called "M1" money supply includes which of the following?

A) currency and checking deposits
B) currency and money markets
C) currency and time deposits
D) currency, time deposits and money markets
E) checking and time deposits

Question 33

The interest rate the Federal Reserve charges its member banks on loans is called:

A) Fed Funds Rate
B) Federal Reserve Rate
C) Discount Rate
D) Federal Loan Rate
E) Reserve Loan Rate

Question 34

Which of the following is not a Threat of New Entrants according to Porter's Five Forces?

A) economies of scale
B) product differentiation
C) quality of substitutes
D) capital requirements
E) government policies

Question 35

The buying and selling of bonds by the Federal Reserve to manage the money supply is called ________.

A) quantitative easing
B) discount window operations
C) open market operations
D) money supply management
E) Federal Reserve operations

Question 36

Which of the following is NOT a primary goal of the Federal Reserve?

A) keep inflation in check
B) encourage consumer spending
C) generate full employment
D) moderate the business cycle
E) help achieve long-term economic growth

Question 37

Government determination of tax rates and spending policies is called ________.

A) tax policy
B) budgetary policy
C) federal spending policy
D) fiscal policy
E) monetary policy

Question 38

"PIGS" refers to which 4 countries in Europe?

A) Portugal, Ireland, Greece and Spain
B) Portugal, Ireland, Germany and Switzerland
C) Poland, Ireland, Germany and Sweden
D) Poland, Italy, Greece and Spain
E) Poland, Italy, Greece and Slovenia

Question 39

The short-term rate at which banks lend to each other is called the ________.

A) Fed Funds Rate
B) Federal Reserve Rate
C) Discount Rate
D) Federal Loan Rate
E) Reserve Loan Rate

Question 40

Which of the following interest rates is directly controlled by the Federal Reserve?

A) the fed funds rate
B) the discount rate
C) the prime rate
D) mortgage rates
E) credit card rates

Question 41

Consider the following information on GDP and CPI for an economy over the last 3 years.Calculate nominal GDP growth for 2012.

A) 2.15%
B) 2.56%
C) 2.95%
D) 3.15%
E) 3.32%

Question 42

You invest $50,000 in Germany when the exchange rate is $1.35/€.Your investment gains 13%,and you subsequently exchange the euros back into dollars at a rate of $1.40/€.What is your total percentage return on this investment?

A) 16.48%
B) 16.89%
C) 17.19%
D) 17.35%
E) 17.85%

Question 43

The CPI for this year was reported as 164.9,If inflation was 1.25 percent,what must the CPI have been last year?

A) 161.21
B) 161.63
C) 162.47
D) 162.65
E) 162.86

Question 44

If the nominal GDP was reported at $122.3 billion and real GDP was reported at $120.1 billion,what was the inflation rate for the period?

A) 1.59%
B) 1.83%
C) 2.32%
D) 2.62%
E) 2.88%

Question 45

If the nominal GDP was reported at $1,305.80 billion and inflation was 2.5%,what is the level of real GDP for the period?

A) $1,179.54
B) $1,191.41
C) $1,212.75
D) $1,255.01
E) $1,273.95

Question 46

Assume the inflation rate in 2016 is 1.3 percent.If the nominal GDP grew 3.5 percent and nominal wages grew 2.6 percent,what are the approximate real growth rates of GDP and wages?

A) 2.00%; 0.80%
B) 3.05%; 0.90%
C) 2.10%; 1.10%
D) 2.20%; 1.20%
E) 2.20%; 1.30%

Question 47

An analyst gathered the following year-end price level data for an economy.What is the economy's annual inflation rate for 2013?

A) 3.07%
B) 3.32%
C) 3.58%
D) 3.87%
E) 3.92%

Question 48

Consider the following information on GDP and CPI for an economy over the last 3 years.Calculate nominal GDP growth for 2011.

A) 2.15%
B) 2.56%
C) 2.95%
D) 3.15%
E) 3.22%

Question 49

Suppose you are a U.S.investor who is planning to invest $200,000 in China.Your Chinese investment gains 7.5 percent.If the exchange rate moves from 5.10 Yuan per dollar to 5.20 per dollar over the period,what is your total return on this investment?

A) 4.55%
B) 4.71%
C) 4.98%
D) 5.29%
E) 5.43%

Question 50

Assume there are 475 million people in the United States,175 million of which make up the labor force.If 16 million are unemployed,what is the unemployment rate?

A) 8.35%
B) 9.14%
C) 10.91%
D) 11.05%
E) 11.74%

Question 51

An analyst gathered the following year-end price level data for an economy.What is the economy's annual compounded inflation rate for 2007-2012?

A) 2.22%
B) 2.49%
C) 2.68%
D) 2.87%
E) 2.92%

Question 52

You invest $250,000 in Japan at a starting exchange rate of 101.50×/$.Your Japanese investment gains 5.6 percent,and the ending exchange rate is 102.40×/$.What is your total return on this investment?

A) 3.91%
B) 4.13%
C) 4.67%
D) 4.82%
E) 5.08%

Question 53

You invest $150,000 in Germany when the exchange rate is $1.25/€.Your investment gains 10%,and you subsequently exchange the euros back into dollars at a rate of $1.20/€.What is your total percentage return on this investment?

A) 4.48%
B) 4.89%
C) 5.10%
D) 5.35%
E) 5.60%

Question 54

Your $785,000 investment in Mexico gained 6 percent.If the exchange rate moves from 13.4 pesos per dollar to 12.5 per dollar over the period,what is your total return on this investment?

A) 12.57%
B) 12.86%
C) 13.12%
D) 13.63%
E) 13.91%

Question 55

Assume the inflation rate in 2016 is 1.2 percent.If the nominal GDP grew 3.3 percent and nominal wages grew 2.1 percent,what are the approximate real growth rates of GDP and wages?

A) 2.00%; 0.40%
B) 2.05%; 0.50%
C) 2.10%; 0.50%
D) 2.10%; 0.90%
E) 2.15%; 0.60%

Question 56

You are planning to invest $150,000 in Hong Kong.If your Hong Kong investment gains 7.5 percent while the exchange rate moves from 7.75 Hong Kong dollars (HK$)per U.S.dollar to 7.70 per dollar over the period,what is your total return on this investment?

A) 6.8%
B) 7.1%
C) 7.6%
D) 8.2%
E) 8.4%

Question 57

An analyst gathered the following year-end price level data for an economy.What is the economy's annual inflation rate for 2016?

A) 2.22%
B) 2.42%
C) 2.68%
D) 2.87%
E) 2.93%

Question 58

Suppose you want to convert U.S.dollars to Indian rupees.If you have $120,000 and the exchange rate is $0.0159 per rupee,how many rupees (in millions)will you receive in the conversion?

A) 6.28 million
B) 6.67 million
C) 7.12 million
D) 7.53 million
E) 7.88 million

Question 59

Assume the CPI increases from 125.9 to 126.4 over the period.What is the inflation rate implied by this CPI change?

A) 0.10%
B) 0.20%
C) 0.30%
D) 0.40%
E) 0.50%

Question 60

As a U.S.investor,you decide to invest $110,000 in Switzerland.You do so at a starting exchange rate of 1.093 SwFr/$.Your Swiss investment gains 7 percent,and the ending exchange rate is 1.091SwFr/$.What is your total return on this investment?

A) 6.30%
B) 6.85%
C) 7.20%
D) 7.40%
E) 7.55%

Question 61

Assume that the Federal Reserve injects $5 billion into the financial system.If the reserve requirement is 25 percent,what is the maximum increase in money supply (in billions)?

A) $20.00
B) $21.30
C) $21.88
D) $22.10
E) $22.60

Question 62

If the Federal Reserve injects $150 billion into the financial system and the money supply increases by a maximum of $750 billion,what must the reserve requirement be?

A) 15%
B) 18%
C) 20%
D) 22%
E) 25%

Question 63

Assume that the Federal Reserve injects $45 billion into the financial system.If the money supply increases by a maximum of $300 billion,what must the reserve requirement be?

A) 10%
B) 12%
C) 15%
D) 18%
E) 20%

Question 64

Assume there are 450 million people in the United States,165 million of which make up the labor force.If 18 million are unemployed,what is the unemployment rate?

A) 8.35%
B) 9.58%
C) 10.91%
D) 11.05%
E) 11.74%

Question 65

If the nominal GDP was reported at $1,351.90 billion and inflation was 3.8%,what is the level of real GDP for the period?

A) $1,289.54
B) $1,302.41
C) $1,344.92
D) $1,385.01
E) $1,402.45

Question 66

Assume the inflation rate in 2016 is 1.5 percent.If the nominal GDP grew 3.1 percent and nominal wages grew 2.0 percent,what are the approximate real growth rates of GDP and wages?

A) 1.00%; 0.40%
B) 1.15%; 0.50%
C) 1.20%; 0.50%
D) 1.40%; 0.90%
E) 1.60%; 0.50%

Question 67

Assume that the Federal Reserve injects $3.2 billion into the financial system.If the reserve requirement is 13 percent,what is the maximum increase in money supply (in billions)?

A) $24.00
B) $24.30
C) $24.88
D) $24.10
E) $24.62

Question 68

If wages grew 3.15 percent in 2013,but inflation was 2.75 percent,what was the approximate real increase in wages?

A) 0.10%
B) 0.20%
C) 0.30%
D) 0.40%
E) 0.50%

Question 69

If the nominal GDP was reported at $1,677 billion and inflation was 1.25%,what is the level of real GDP for the period?

A) $1,579.54
B) $1,591.41
C) $1,612.75
D) $1,656.30
E) $1,673.95

Question 70

Suppose you are a U.S.investor who is planning to invest $100,000 in China.Your Chinese investment gains 6 percent.If the exchange rate moves from 7.10 Yuan per dollar to 7.15 per dollar over the period,what is your total return on this investment?

A) 4.52%
B) 4.76%
C) 4.91%
D) 5.26%
E) 5.49%

Question 71

If the nominal GDP was reported at $141.8 billion and real GDP was reported at $138.4 billion,what was the inflation rate for the period?

A) 1.54%
B) 1.92%
C) 2.46%
D) 2.67%
E) 2.81%

Question 72

Assume that the Federal Reserve injects $2.8 billion into the financial system.If the reserve requirement is 14 percent,what is the maximum increase in money supply (in billions)?

A) $20.00
B) $21.30
C) $21.88
D) $22.10
E) $22.60

Question 73

You invest $75,000 in Germany when the exchange rate is $1.25/€.Your investment gains 10%,and you subsequently exchange the euros back into dollars at a rate of $1.30/€.What is your total percentage return on this investment?

A) 13.48%
B) 13.89%
C) 14.19%
D) 14.40%
E) 14.85%