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Exam 12: Macroeconomic and Industry Analysis

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Question 1

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Countercyclical fiscal policy is best described by which of the following statements?

A) Government surpluses are planned during economic booms, and deficits are planned during economic recessions.
B) The annual budget should always be balanced.
C) Deficits should always equal surpluses.
D) Government deficits are planned during economic booms, and surpluses are planned during economic recessions.

E) B) and C)
F) C) and D)

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Question 2

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Inflation is caused by ________.

A) unions
B) rapid growth of the money supply
C) excess supply
D) low rates of capacity utilization

E) C) and D)
F) A) and B)

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Question 3

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Pharmaceuticals, food, and other necessities would be good performers during the ________ stage of the business cycle.

Which industry had the highest stock price performance in 2017 according to the text?

An investment strategy that entails shifting the portfolio into industry sectors that are expected to outperform others based on macroeconomic forecasts is termed ________.

If you believe the economy is about to go into a recession, you might change your asset allocation by selling ________ and buying ________.

At what point in the industry life cycle are inefficiencies in competitors most likely to be removed?

Capital goods industries such as industrial equipment, transportation, and construction would be good investments during the ________ stage of the business cycle.

The nominal interest rate is 10%. The real interest rate is 4%. The inflation rate must be ________.

________ in interest rates are associated with stock market declines.

A big increase in government spending is an example of a ________.

The nominal interest rate is 6%. The inflation rate is 3%. The exact real interest rate must be ________.

Increases in the money supply will cause demand for investment and consumption goods to ________ in the short run and may cause prices to ________ in the long run.

GDP refers to ________.

A supply-side economist would likely agree with which of the following statements?

Which one of the following describes the amount by which government spending exceeds government revenues?

An industry analysis for manufacturers of a small personal care gadget observed the following characteristics: 1) Industry sales have grown at 15%-20% per year in recent years and are expected to grow at 10%-15% per year over the next 3 years, still well above the economic growth rate. 2) Some U.S. manufacturers are attempting to enter fast-growing non-U.S. markets, which remain largely unexploited. 3) Some manufacturers have created a new niche in the industry by selling directly to customers through mail order. Sales for this industry segment are growing at 40% per year. 4) The current penetration rate in the United States is 60% of households and will be difficult to increase. 5) Manufacturers compete fiercely on the basis of price, and price wars within the industry are common. 6) Some manufacturers are able to develop new, unexploited niche markets in the United States based on company reputation, quality, and service. 7) Several manufacturers have recently merged, and it is expected that consolidation in the industry will increase. 8) New manufacturers continue to enter the market. Characteristics ________ would be typical of an industry that is in the consolidation stage.

A top-down analysis of a firm's prospects starts with an analysis of the ________.

Stalwarts are typically found in the ________ stage of the industry life cycle.

Everything else equal, an increase in the government budget deficit would: I. Increase the government's demand for funds II. Shift the demand curve for funds to the left III. Increase the interest rate in the economy