Chapter 11: Analysis Flashcards
______ looks at company specifics, balance sheet and income statement, and is concerned with alpha, financial, or bankruptcy risk. It is economics based, monetarism driven, and Federal Reserve Board directed.
Fundamental Analysis
If the Fed buys, the money supply ______, interest rates ______, yield curves become ______, prices ______ … prosperity is nearing.
- Grows
- Decline
- Normal
- Rise
If the Fed sells, the money supply ______, interest rates ______, yield curves become ______, short-term rates become ______ than bond yields … a recession is coming.
- Shrinks
- Rise
- Inverted
- Higher
______ is concerned with four major issues:
- Monetary policies as implemented by the Federal Reserve Board (FRB) through its open market committee.
- Fiscal vs. Monetary policy
- Economic indicators: leading, lagging, and coincident.
- Specific company information: balance sheet and income statement.
Fundamental Analysis
______ is our total national output of goods and services.
Gross Domestic Product (GDP)
The ______ gauges inflation by measuring costs in constant dollars.
Consumer Price Index (CPI)
______ is defined as too many dollars chasing too few goods and services.
Inflation
The economic cycle starts with the ______ phase.
Expansion
______ is a common symptom of the expansion phase.
Inflation
The expansion phase culminates at the ______.
Peak
If the cycle lingers too long at the peak, we sometimes experience ______, which is a period of rising prices with no economic growth.
Stagflation
______ is a slowing of the economy over a prolonged period of time.
Stagnation
______ follows the peak, and is sometimes accompanied by ______.
- Decline
2. Deflation
______ is a period of falling prices; too few dollars chasing too many goods and services.
Deflation
A recession is defined as ______ (______ months) of a decline in GDP.
- 2 Consecutive Quarters
2. 6 Months
A depression is defined as ______ (______ months) of a decline in GDP.
- 8 Consecutive Quarters
2. 24 Months
The decline phase ends when the economy bottoms out, which is called the ______.
Trough
After the ______, the economy begins to expand again, and the cycle starts over.
Trough
______ involves the president and Congress passing bills and appropriations that influence economic activity. ______ and ______ are its primary tools.
- Fiscal Policy
- Federal Taxation
- Spending
Congress can ______ to increase economic activity or ______ to decrease economic activity.
- Lower Taxes
2. Raise Taxes
The federal government can increase spending on ______ (i.e., roads and bridges), ______, and/or ______ to stimulate the economy. It can also increase ______, such as social security or tax rebate programs.
- Capital Projects
- Military
- Social Programs
- Transfer Payments
Congress not only has the ability to spend money, but, if needed, can authorize ______ to stimulate the economy.
Borrowing Funds
______ is the economic theory that advocated using fiscal policy to jump-start the economy to “full employment”.
Keynesian
______ is the use of government spending and taxation to influence the economy.
Fiscal Policy