Question

1. If interest rates rise, the price of a not-yet mature fixed-income security can be expected to: (a) rise; (b) remain the same; (c) inflate; (d) decrease.
2. The National Income and Product Accounts simultaneously provide data on: (a) production and efficiency; (b) technological progress and product improvements; (c) total output and the income derived from its production; (d) slugging percentage and on-base percentage.
   5. Influences on real GDP or inflation separate and apart from the customary functioning of the economy over the economic cycle can be characterized as: (a) structural; (b) frictional; (c) multicollinear; (d) autoregressive.
   
   6. Suppose you paid a tax of $10 on an income of $100, $25 on an income of $200 and $60 on an income of $300. This is an example of a: (a) flat tax; (b) regressive tax; (c) inverse tax; (d) progressive tax.

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Answer 1

Q1) There is an inverse relationship between the price of the bond and its interest rates. Thus, if the interest rate rises, the price of security is expected to decrease. Thus the answer is (d)

Q2) The National Income and Product Accounts are produced by the Bureau of Economic Analysis in the US and they are the main source of data on general economic activity. They use a double-entry accounting system in order to report the monetary value of the output produced in US as well as the distribution of incomes that production generates. Thus, the answer is (c)

Q6) Since the tax rate is increasing wth income, it is called a progressive tax. Thus, the answer is (d)