Exam 4

Question 1

Consumer Price Index (676)

Answer 1

Measures the average prices paid by urban consumers for a fixed “basket” of consumer goods and services.

Question 2

Core CPI

Answer 2

Measures the average prices paid by urban consumers for a fixed “basket” of consumer goods and services, excluding food and energy.

Question 3

Cyclical Sectors

Answer 3

Have a high sensitivity to the business cycle.

Question 4

Defensive Sectors

Answer 4

Have a low sensitivity to the business cycle.

Question 5

Discount Rate

Answer 5

The interest rate the Fed charges its member banks on loans.

Question 6

Federal Funds Rate

Answer 6

The short-term rate at which banks lend to each other

Question 7

Open Market Operations

Answer 7

The buying and selling of bonds directly on the secondary market for purposes of increasing or decreasing the money supply

Question 8

Fiscal Policy

Answer 8

Government determination of tax rates and spending policies

Question 9

Gross Domestic Product (GDP)

Answer 9

The market value of goods and services produced over a period of time

Question 10

Nominal GDP

Answer 10

The dollar value of economic out- put in terms of the current year

Question 11

Real GDP

Answer 11

The value of economic output adjusted for inflation.

Question 12

Labor Force

Answer 12

All nonmilitary working-age people who are employed or unemployed but seeking employment.

Question 13

Unemployment Rate

Answer 13

The percentage of the labor force that is unemployed but seeking employment.

Question 14

Labor Force Participation Rate

Answer 14

The labor force divided by the non- military working-age population.