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Self made flashcards (CFP review) > Economic Indicators > Flashcards

Economic Indicators Flashcards

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CFP® flashcards
1
Q

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

A

Supply

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2
Q

What factors influence supply?

A

price, cost of production, level of technology

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3
Q

What 3 factors influence demand?

A

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

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4
Q

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

A

Demand

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5
Q

Who sets Fiscal policy?

A

The Federal reserve

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6
Q

What does fiscal policy represent?

A

Federal taxation and spending

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7
Q

what is fiscal policy designed to do?

A

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

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8
Q

Who sets monetary policy?

A

The Federal Reserve

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9
Q

What are the 4 tools of the Federal Reserve?

A

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

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10
Q

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

A

Reserve Requirement

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11
Q

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

A

Fed will reduce the reserve requirement

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12
Q

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

A

Fed will increase the reserve requirement

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13
Q

What is the Discount rate?

A

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

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14
Q

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

A

Prime Rate

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15
Q

How does the Prime Rate relate to monetary policy?

A

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

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16
Q

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

A

Lowers the discount rate

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17
Q

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

A

raises the discount rate

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18
Q

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

A

Repo/ buys bonds

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19
Q

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

A

reverse repo/ Sells bonds

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20
Q

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

A

Decrease margin percentage required

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21
Q

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

A

Increases margin percentage required

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22
Q

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

A

Leading Economic Indicator

23
Q

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

A

Leading economic indicator

24
Q

What type of economic indicator is new manufacturing orders?

A

Leading economic indicator

25
Q

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

A

Leading economic indicator

26
Q

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

A

Leading economic indicator

27
Q

What type of economic indicator is new private housing units?

A

Leading economic indicator

28
Q

What type of economic indicator is interest rate spread?

A

Leading economic indicator

29
Q

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

A

Leading economic indicator

30
Q

What type of economic indicator is the money supply?

A

Leading economic indicator

31
Q

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

A

Leading economic indicator

32
Q

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

A

Coincident indicator

33
Q

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

A

Coincident indicator

34
Q

What type of economic indicator is Industrial production?

A

Coincident indicator

35
Q

What type of economic indicator is average duration of unemployment?

A

Lagging indicator

36
Q

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

A

Lagging indicator

37
Q

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

A

Lagging indicator

38
Q

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

A

Lagging indicator

39
Q

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

A

Lagging indicator

40
Q

What is a recession?

A

2 consecutive quarters of decline in real GDP

41
Q

What is a depression?

A

6 consecutive quarters of decline in real GDP

42
Q

What is GDP?

A

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

43
Q

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

A

GDP

44
Q

What is the CPI?

A

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

45
Q

What 8 major categories are included in CPI?

A
  1. Food and Beverage
  2. Apparel
  3. education and communication
  4. Housing
  5. Transportation
  6. other goods and services
  7. recreation
  8. Medical Care
46
Q

What is the PPI?

A

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

47
Q

What is the leading indicator of inflation trends?

A

The PPI

48
Q

Which industry has little sensitivity to the business cycle?

A

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

48
Q

What industries tend to perform other industries during a trough?

A

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

48
Q

What are examples of consumer durable goods?

A

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

49
Q

What are durable goods?

A

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

50
Q

What are non-durable goods?

A

Consumables. Unaffected by recession because they generally do not last

51
Q
A

Self made flashcards (CFP review) (2 decks)

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