Economic Factors Quiz Flashcards
Who approves the fiscal policy of the United States?
Congress
The theory that reducing taxes and limiting government involvement in business activities stimulates economic growth is called
Supply side
Which best describe the federal funds rate?
Daily average of reserve member banks
Stimulating the economy through spending policies is known as
Keynesianism
An income statement
Covers financial activity over a period of time
Which of the following statements about the balance of payments is true?
It is the sum of all transactions between a country and the rest of the world over a specified period of time.
Which of the following is a coincident indicator?
Index of industrial production
Which of the following is not included in the current assets section of a balance sheet?
Goodwill
Which of the following best describes GNP?
GDP plus income earned by residents from overseas minus income earned within the domestic economy by overseas residents
A corporation with a low common stock ratio is
More vulnerable to interest rate changes
The bond ratio measures
The amount of corporate capitalization that comes from long term debt
Gross domestic product (GDP) is
The sum of all goods and services produced in the US computed in real dollars
All of the following are true of the organization making structure of a balance sheet
The net worth section is below the liabilities section
It is arranged from current items at the top to long term items at the bottom
It follows an equation
Which of the following is a lagging indicator?
Average prime rate
To determine a corporations profitability year over year which of the following is most suitable?
Profit ratio
Which of the following is a coincident indicator?
GDP
Which of the following components reconcile cash flow to net income?
Depreciation and amortization
Which of the following statements about the balance of payments is true?
It is the sum of all transactions between a country and the rest of the world over a specified period of time.
Which situation would cause U.S. exports to become less competitive than foreign exports?
The U.S. dollar strengthens when compared to foreign currencies.
Which of the following is considered a coincident economic indicator?
Index of industrial production
If the gross domestic product of one year is compared to the GDP of another year the comparison would be most valid if it were made
In constant dollars
Which of the following is a lagging indicator?
Average prime rate
Open market operations of the federal reserve board cause direct changes in
M1
A heavily leveraged corporation has which of the following?
High debt/ equity ratio
Which of the following industries is least defensive?
Automobile production
If the federal reserve board through the FOMC (Federal Open Market Committee) lowers the discount rate which of the following will decline?
T bill rate
Which of the following would most likely benefit from a sustained decline in interest rates?
Federal savings banks
Broker dealers
Utilities and airlines
All of the following are lagging indicators
Employment
Automobile sales
Appliance sales
The fed funds interest rate is the interest rate that
One bank charges another for overnight borrowing
To determine a corporations profitability year over year which of the following is most suitable?
Profit ratio
What ratio would an analyst consider when evaluating a corporations ability to service its debt?
Interest coverage ratio
The current ratio formula is
Current assets ➗ current liabilities
Which of the following is considered to be a lagging indicator of economic trends?
Unemployment
Which situation would cause the U.S. exports to become less competitive than foreign exports?
The U.S. dollar strengthens when compared to foreign currencies
Which of the following components reconcile cash flow to net income?
Depreciation and amortization
Which of the following statements is true about the balance of payments?
It is the sum of all transactions between a country and the rest of the world over a specified period of time.
Which of the following would increase us exports?
Weakening dollar
Which of the following is part of a corporation capital structure?
Debentures
Preferred stock
Paid in capital surplus
Which of the following discloses the assets available to common stock?
Book value per share
What is the term for a 6 month consecutive downturn in the economy?
Recession
The normal business cycle starts with
Expansion
Which measures a corporations solvency?
Working capital
The quick ratio is
A more stringent measure than the current ratio
One way an analyst evaluated management efficiency is by reviewing the
Return on common equity
Fully diluted earnings per share
Is a smaller number than EPS
Which of the following industries is most cyclical?
Home appliances
EPS measures
Earnings available to common stockholders
Which of the following is the quick ratio?
The acid test
The current ratio formula is
Current assets ➗ current liabilities
The bond ration measures
The amount of corporate capitalization that comes from a long term debt
Which of the following indicates the generosity of the board of directors?
Dividend payout ratio
All of the following are examples of defensive industries
Building materials
An analyst comparing the stock prices of two similar market competitors would most be interested in their
P/E ratio
Which of the following have currency risks?
American depositary receipts
