Economic Indicators

Question 1

What is the amount of good and/ or services that producers are wiling to sell

Answer 1

Supply

Question 2

What factors influence supply?

Answer 2

price, cost of production, level of technology

Question 3

What 3 factors influence demand?

Answer 3

price, price of substitutes, consumer’s income and tastes

Question 4

What is the amount of goods and/ or services that consumers are willing to buy?

Answer 4

Demand

Question 5

Who sets Fiscal policy?

Answer 5

The Federal reserve

Question 6

What does fiscal policy represent?

Answer 6

Federal taxation and spending

Question 7

what is fiscal policy designed to do?

Answer 7

Achieve full employment, price stability, and sustained growth in the economy

Question 8

Who sets monetary policy?

Answer 8

The Federal Reserve

Question 9

What are the 4 tools of the Federal Reserve?

Answer 9

Set reserve requirements, Control the Discount Rate, Open market operations, margin rates

Question 10

What is the level of reserve its member banks must maintain (set by Fed)?

Answer 10

Reserve Requirement

Question 11

How will the reserve requirement be adjusted in an expansionary policy?

Answer 11

Fed will reduce the reserve requirement

Question 12

How will the reserve requirement be adjusted in a contractionary policy?

Answer 12

Fed will increase the reserve requirement

Question 13

What is the Discount rate?

Answer 13

The rate the Federal Reserve charges its member banks to borrow to meet reserve requiremements

Question 14

What is the interest rate that commercial banks charge their most creditworthy corporate customers?

Answer 14

Prime Rate

Question 15

How does the Prime Rate relate to monetary policy?

Answer 15

Not set by Fed- ALWAYS a wrong answer relating to monetary policy

Question 16

How does the Fed change the discount rate in expansionary policy?

Answer 16

Lowers the discount rate

Question 17

How does the Fed change the discount rate in contractionary policy?

Answer 17

raises the discount rate

Question 18

How does the Fed adjust credit ability in Open market operations during expansionary policy?

Answer 18

Repo/ buys bonds

Question 19

How does the Fed adjust credit ability in Open market operations during contractionary policy?

Answer 19

reverse repo/ Sells bonds

Question 20

How does the fed adjust margin rates during an expansionary policy?

Answer 20

Decrease margin percentage required

Question 21

How does the fed adjust margin rates during an contractionary policy?

Answer 21

Increases margin percentage required

Question 22

What type of economic indicator is Average weekly hours for production workers in manufacturing?

Answer 22

Leading Economic Indicator

Question 23

What type of economic indicator is initial claims for unemployment insurance?

Answer 23

Leading economic indicator

Question 24

What type of economic indicator is new manufacturing orders?

Answer 24

Leading economic indicator

Question 25

What type of economic indicator is vendor performance (measured as % of companies reporting slower deliveries)?

Answer 25

Leading economic indicator

Question 26

What type of economic indicator is contracts and orders for plants and equipment?

Answer 26

Leading economic indicator

Question 27

What type of economic indicator is new private housing units?

Answer 27

Leading economic indicator

Question 28

What type of economic indicator is interest rate spread?

Answer 28

Leading economic indicator

Question 29

What type of economic indicator is stock prices; 500 common stocks?

Answer 29

Leading economic indicator

Question 30

What type of economic indicator is the money supply?

Answer 30

Leading economic indicator

Question 31

What type of economic indicator is the index of consumer expectations?

Answer 31

Leading economic indicator

Question 32

What type of economic indicator is number of employees on non-agriculture payrolls?

Answer 32

Coincident indicator

Question 33

What type of economic indicator is personal income less transfer payments (e.g. Social Security, welfare)

Answer 33

Coincident indicator

Question 34

What type of economic indicator is Industrial production?

Answer 34

Coincident indicator

Question 35

What type of economic indicator is average duration of unemployment?

Answer 35

Lagging indicator

Question 36

What type of economic indicator is average prime rate charged by banks?

Answer 36

Lagging indicator

Question 37

What type of economic indicator is commercial and industrial loans outstanding?

Answer 37

Lagging indicator

Question 38

What type of economic indicator is ratio of consumer installment credit outstanding to personal income?

Answer 38

Lagging indicator

Question 39

What type of economic indicator is change in consumer price index for servicecs?

Answer 39

Lagging indicator

Question 40

What is a recession?

Answer 40

2 consecutive quarters of decline in real GDP

Question 41

What is a depression?

Answer 41

6 consecutive quarters of decline in real GDP

Question 42

What is GDP?

Answer 42

Gross Domestic product- dollar value of all final goods and services newly produced within the country's boundaries

Question 43

What counts economic activity without regard to yearly price fluctuations (inflation)?

Answer 43

GDP

Question 44

What is the CPI?

Answer 44

Consumer price index- "Market basket" of selected goods and services in various cities across the country

Question 45

What 8 major categories are included in CPI?

Answer 45

1. Food and Beverage 2. Apparel 3. education and communication 4. Housing 5. Transportation 6. other goods and services 7. recreation 8. Medical Care

Question 46

What is the PPI?

Answer 46

Producer Price Index- price of various items such as farm products and industrial commodities

Question 47

What is the leading indicator of inflation trends?

Answer 47

The PPI

Question 48

Which industry has little sensitivity to the business cycle?

Answer 48

Defensive industries- food, pharmaceuticals, public utilities. Will outperform cyclical industries even when the economy enters a recession

Question 48

What industries tend to perform other industries during a trough?

Answer 48

Those with cyclical industries (have above average sensitivity). Automakers and appliances. Consumers don't buy high ticket items during recessions.

Question 48

What are examples of consumer durable goods?

Answer 48

Cars, appliances, business equipment, electronics, home furnishings and fixtures, houseware accessories, photographic equipment, recreational goods, sporting goods, toys/ games

Question 49

What are durable goods?

Answer 49

Hard goods that do not wear out quickly. They are cyclical

Question 50

What are non-durable goods?

Answer 50

Consumables. Unaffected by recession because they generally do not last