Question

1. The first step in any top down stock valuation is:A. economic analysis.B. an accurate stock market prediction.C. financial analysis.D. industry analysis.

2. Which of the following is not a goal of the federal government economic policy as established by the Employment Act of 1946?A. Low inflationB. High levels of employmentC. Balanced federal budgetsD. Economic growth

3. The most widely used tool of the Federal Reserve is: A. open-market operations (buying and selling securities for its own portfolio).B. changing the interest rate charged to commercial banks on very short-term loans.C. changing reserve requirements on commercial bank time or demand deposits.D. fiscal policy.

4. What is the difference between real GDP and nominal GDP?A. Real GDP is stated in current dollarsB. Inflation-adjusted, or nominal, GDP reflects output in physical termsC. Inflation.D. None of the above

5. According to the traditional definitions, a recession is two or more quarters of: A. negative nominal Gross Domestic Product (GDP) growth.B. negative real GDP growth.C. a rate of inflation which exceeds real GDP growth.D. declining growth in real past GDP.

6. The National Bureau of Economic Research revised its definition of a recession in 2001 to read as follows: A recession is:A. two or more quarters of negative GDP growth.B. a significant decline in economic activity spread across the economy and lasting more than a few months.C. a decline in industrial production lasting more than one year.D. a decline in the growth rate of real GDP by more than 2% in any one quarter.

7. The National Bureau of Economic Research publishes information about economic indicators in its monthly Survey of Current Business. The most important indicators to investors are the:A. leading indicators.B. coincident indicators.C. lagging indicators.D. market indicators.

8. The composite index of leading indicators, made up of ten leading indicators, has historicallyA. not always preceded changes in the business cycle.B. given roughly the same notice at peaks as at troughs.C. varied widely in its timing of notice at peaks and troughs.D. More than one of the above

9. Some of the major leading indicators would be:A. money supply (M2), consumer expectations, and stock prices (S&P 500).B. personal income, employees on nonagricultural payrolls, and industrial production.C. average prime rate charged by banks, labor cost per unit of output, and commercial and industrial loans outstanding.D. All of the above are leading indicators

10. Some of the major coincident indicators would be:A. money supply (M2), consumer expectations, and stock prices (S&P 500).B. personal income, employees on nonagricultural payrolls, and industrial production.C. average prime rate charged by banks, labor cost per unit of output, and commercial and industrial loans outstanding.D. All of the above are coincident indicators

11. Some of the major lagging indicators would be:A. money supply (M2), consumer expectations, and stock prices (S&P 500).B. personal income, employees on nonagricultural payrolls, and industrial production.C. average prime rate charged by banks, labor cost per unit of output, and commercial and industrial loans outstanding.D. All of the above are lagging indicators

12. Since the stock market is the most accurate and reliable of the ten leading indicators,A. investors need indicators which provide more lead time than the stock market.B. investors are able to reduce or eliminate uncertainty about trading stocks.C. investors should use lagging indicators to forecast changes in stock prices.D. None of the above

13. The ultimate purpose of fundamental stock valuation is:A. to eliminate stocks of those companies that are potential losers from the portfolio.B. toidentify for purchase those companies that are fundamentally undervalued.C. to learn to identify peaks and troughs of the business cycle.D. Two of the above.

14. Of the predictors of economic patterns and stock market movements, the best is:A. the money supply.B. the level of interest rates.C. the ten leading indicators.D. No one variable is best, as many as possible should be considered

15. All of the following are goals of monetary and fiscal policy, except:A. stable prices.B. business stability at high levels of production.C. sustained economic growth.D. a balance in domestic payments.

16. All of the following are disadvantages of fiscal policy, except:A. a long implementation lag.B. that it may be politically motivated.C. that it may be economically motivated.D. that congress must approve the budgets and develop the tax laws.

17. In order to stimulate the economy out of the 2008-2010 recession, the Federal Reserve Board:A. printed more money than they have in decades.B. did everything they could to see that the federal deficit was reduced as much as possible.C. drove interest rates to their lowest levels in decades.D. lowered taxes.

18. The primary tools used to stimulate economic activity are: A. international banking policies.B. monetary and fiscal policies.C. tax policy and interest rates.D. imports and exports.

19. Economic analysis is important for investors, because they need to anticipate A. changes in corporate profits due to business cycle impacts.B. growth in various industry segments based on changing economic trends.C. how foreign trade might affect U.S. companies.D. All of the above

20. Fiscal policy concerns the implementation of the government's A. spending and taxing plans.B. money supply and interest rate strategy.C. foreign trade policy.D. attitude towards business investment

.21. Fiscal policy is implemented by:A. the President of the U.S.B. the Senate.C. the Federal Reserve.D. Congress (the House and the Senate).

22. Which of the following are true statements?A. When a country's economy is healthy, its citizens will spend more in general.B. When a country's economy is healthy, its citizens will import more high-priced luxury goods.C. When a country's economy is healthy, its currency rises against its trading partners.D. A and B are both correct

23. The breakdown of U.S. Gross Domestic Product into its major categories is usually as which of the following? A. Personal Consumption, Government Purchases, Net ExportsB. Personal Consumption, Government Purchases, Gross Private Domestic Investment, Net ExportsC. Personal Consumption, Corporate Consumption, Government ConsumptionD. Domestic Consumption and consumption of foreign goods by U.S. citizens

24. Capacity utilization measures current manufacturing output against potential output. Which of the following statements is correct? A. When capacity utilization is low, companies use their most productive and efficient plants and equipment.B. As capacity utilization increases, companies bring less efficient plants and equipment on line.C. When the capacity utilization rate moves above 80%, inflationary pressures may start to build in the economy.D. All of the above are true

25. In the comparative international arena of real GDP growth rates, which country has had the highest growth in real GDP over the years 1993 to 2005? A. The United StatesB. JapanC. ChinaD. Germany

Answer 1

Question1.

The first step in any top down stock valuation is:

Answer : A. economic analysis.

Question2

Which of the following is not a goal of the federal government economic policy as established by the Employment Act of 1946.

Answer : Balance federal budgets

Question3

The most widely used tool of the Federal Reserve is:

Answer A. open-market operations (buying and selling securities for its own portfolio).

Question4

What is the difference between real GDP and nominal GDP?

Answer :C. Inflation.