SIE chapter 1 pt 2

Question 1

business cycle goes through ___Stages, those are

Answer 1

expansion
peak
contraction
trough

Question 2

expansion

Answer 2

increased business activity

Question 3

contracting

Answer 3

when a business activity declines from its peak

Question 4

recessions

Answer 4

mild- short term contractions in the economy

Question 5

trough

Answer 5

when business activity stops declining and levels off

Question 6

leading indicators

Answer 6

spot checks of business activity that reliably predict trends in the economy

Question 7

coincident indicators

Answer 7

confirm where the economy is

Question 8

lagging indicators

Answer 8

factors that change after the economy has begun a new trend but serve as confirmation for the new trend

Question 9

inflation

Answer 9

increases in prices

dollar buying power hurt

Question 10

deflation

Answer 10

decline in prices

buying power increases

Question 11

stagnation

Answer 11

prolonged periods of slow or little economic growth

leads to high unemployment

Question 12

stagflation

Answer 12

combination of inflation and high unemployment

Question 13

defensive industries

Answer 13

are least affected by normal business cycles

generally produce nondurable consumer goods such as food, pharmaceuticals, and tobacco, or supply essential services such as utility companies

Question 14

cyclical industries

Answer 14

highly sensitive to business cycles and inflation trends. Most cyclical industries produce durable goods such as heavy machinery, and raw materials such as steel and automobiles

Question 15

an industry is considered in the growth phase if

Answer 15

the industry is growing faster than the economy as a whole

Question 16

special situation stocks

Answer 16

stocks of a company with an unusual profit potential resulting from nonrecurring circumstances

Question 17

Keynesian theory

Answer 17

believes that demand for goods ultimately controls employment and prices
not enough demand=unemployment
to much demand=inflation
believe it was governments right and responsibility to manipulate demand

Question 18

Monetarist theory

Answer 18

quantity of money, money supply, is major determinant of price levels
they believe moderately increasing money supply leads to price stability

Question 19

supply side economics

Answer 19

believes the government should allow market forces to determine the prices of all goods.

believe government should reduce government spending as well as taxes

Question 20

balance of payments

Answer 20

the flow of money between the united states and other countries

Question 21

surplus

Answer 21

more money flowing into country than out

Question 22

deficit

Answer 22

more money flowing out of country than in

Question 23

balance of trade

Answer 23

export and import of goods and services

Question 24

when debits exceeds credits what happens to balance of payments

Answer 24

a deficit in the balance of payments occurs

Question 25

when credits exceeds debits what happens to balance of payments

Answer 25

a surplus exists in the balance of payments

Question 26

Gross domestic product

Answer 26

a nations annual economic output, all of the goods and services produced within a nation

Question 27

an increase in imports would cause gdp to

Answer 27

initially increase and then decrease

Question 28

when a government actively manipulates the economy through tax and spending policies this is referred to as

Answer 28

Keynesian economics

Question 29

underwriting groups often referred to as

Answer 29

underwriting syndicates

Question 30

primary offering

Answer 30

The proceeds raised go to the issuing corporation.

Done in the primary market

Question 31

public offerings of securities

Answer 31

securities are offered and sold to the investing public.