Chapter 19 - Economic Factors

Question 1

What is the effect of raising the minimum reserve requirement?

Answer 1

Decreases the money supply and tightens credit.

Question 2

For collateralized loans they make to broker-dealers (for margin purposes), commercial banks charge the _____ rate.

Answer 2

call

Question 3

The Federal Reserve Board will _____ securities to increase the money supply and ease credit.

Answer 3

buy

Question 4

Economic theory stating that government intervention in the economy is necessary for sustained economic growth.

Answer 4

Keynesian

Question 5

The rate of interest banks charge each other on overnight loans.

Answer 5

The fed funds rate

Question 6

The rate that banks charge their most creditworthy corporate clients.

Answer 6

Prime Rate

Question 7

Stocks of companies that have sales and earnings growing faster than the overall economy.

Answer 7

Growth stocks

Question 8

During periods of easy money when interest rates are declining, yield curves tend to:

Answer 8

slope upward from the shorter to the longer maturities

Question 9

Money received by a corporation when it sells its stock above its par value is called:

Answer 9

Paid-in capital

Question 10

During which phase of the business cycle will an investor experience a decrease in purchasing power?

Answer 10

Peak

Question 11

Which of the following choices is NOT a leading economic indicator?
A) Building permits
B) Consumer expectations
C) Prime rate
D) Stock Prices

Answer 11

Prime rate