投资学第7版TestBank答案17Word下载.docx
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D)AandB
E)BandC
ADifficulty:
Rationale:
Consumerdurables,suchasautomobiles,arehighlycyclicalaspurchasescanbedelayeduntilgoodtimes.Necessities,low-ticketitems,andaddictiveproductsarepurchasedingoodtimesandbad.
3.Demand-sideeconomicsisconcernedwith_______.
A)governmentspendingandtaxlevels
B)monetarypolicy
C)fiscalpolicy
E)A,B,andC
EDifficulty:
Demand-sideeconomicsisconcernedwithmonetaryandfiscalpolicy(governmentspendingandtaxing).
4.Themostwidelyusedmonetarytoolis___________.
A)alteringthediscountrate
B)alteringthereserverequirements
C)openmarketoperations
D)alteringmarginaltaxrates
E)noneoftheabove
CDifficulty:
TheFederalReserve'
sopenmarketoperationsarethemostwidelyusedandmosteffectivemonetarytoolforinfluencinginterestrates.
5.The"
real"
orinflation-adjusted,exchangerate,is
A)thebalanceoftrade.
B)thebudgetdeficit.
C)thepurchasingpowerratio.
D)unimportanttotheU.Seconomy.
E)noneoftheabove.
Theratioofonecountry'
spurchasingpowertoanother'
siscalledthe"
orinflationadjusted,exchangerate,andisanimportantmeasureoftherelativecostsofdomesticversusforeigngoods.
6.The"
normal"
rangeofprice-earningsratiosfortheS&
P500Indexis
A)between2and10.
B)between5and15.
C)lessthan8.
D)between12and25
E)greaterthan20.
Moderate
Stockpricescommonlytradeatbetween12and25timesearnings.
7.Monetarypolicyisdeterminedby
A)governmentbudgetdecisions.
B)presidentialmandates.
C)theboardofGovernorsoftheFederalReserveSystem.
D)congressionalactions.
TheBoardofGovernorsoftheFederalReserveSystemdeterminesmonetarypolicythroughopenmarketoperations,changesinthediscountrateandreserverequirementadjustments.
8.Atroughis________.
A)atransitionfromanexpansioninthebusinesscycletothestartofacontraction
B)atransitionfromacontractioninthebusinesscycletothestartofanexpansion
C)adepressionthatlastsmorethanthreeyears.
D)onlysomethingusedbyfarmerstofeedpigsandnotaninvestmentterm
BDifficulty:
Thetroughoccurswhentheeconomyhashit"
rockbottom"
inthebusinesscycleandrecoveryisahead.
9.Apeakis________.
Thepeakoccurswhentheeconomyhashitthetopinthebusinesscycle.
10.Iftheeconomyisgrowing,firmswithhighoperatingleveragewillexperience__________.
A)higherincreasesinprofitsthanfirmswithlowoperatingleverage.
B)similarincreasesinprofitsasfirmswithlowoperatingleverage.
C)smallerincreasesinprofitsthanfirmswithlowoperatingleverage.
D)nochangeinprofits.
Assalesincrease,firmswithhighoperatingleveragespreadthesefixedcostsovermoreunitsandthusincreaseprofits.
11.Iftheeconomyisshrinking,firmswithhighoperatingleveragewillexperience__________.
A)higherdecreasesinprofitsthanfirmswithlowoperatingleverage.
B)similardecreasesinprofitsasfirmswithlowoperatingleverage.
C)smallerdecreasesinprofitsthanfirmswithlowoperatingleverage.
Assalesdecrease,firmswithhighoperatingleveragespreadthesefixedcostsoverfewerunitsandthusdecreaseprofits.
12.Iftheeconomyisgrowing,firmswithlowoperatingleveragewillexperience__________.
A)higherincreasesinprofitsthanfirmswithhighoperatingleverage.
B)similarincreasesinprofitsasfirmswithhighoperatingleverage.
C)smallerincreasesinprofitsthanfirmswithhighoperatingleverage.
13.Iftheeconomyisshrinking,firmswithlowoperatingleveragewillexperience__________.
A)higherdecreasesinprofitsthanfirmswithhighoperatingleverage.
B)similardecreasesinprofitsasfirmswithhighoperatingleverage.
C)smallerdecreasesinprofitsthanfirmswithhighoperatingleverage.
14.GDPrefersto_________.
A)theamountofpersonaldisposableincomeintheeconomy.
B)thedifferencebetweengovernmentspendingandgovernmentrevenues.
C)thetotalmanufacturingoutputintheeconomy.
D)thetotalproductionofgoodsandservicesintheeconomy
GDPisameasureoftheproductiveoutputofthecountry,bothintermsofgoodsandservices.
15.Theaveragedurationofunemploymentandchangesintheconsumerpriceindexforservicesare_________.
A)leadingeconomicindicators
B)coincidentaleconomicindicators
C)laggingeconomicindicators
D)compositeeconomicindicators
Theseindicators(C)lagthegeneraleconomy,andareindicatorsthattheeconomyisabouttochangedirections.
16.Afirminanindustrythatisverysensitivetothebusinesscyclewilllikelyhaveastockbeta___________.
A)greaterthan1.0
B)equalto1.0
C)lessthan1.0butgreaterthan0.0
D)equaltoorlessthan0.0
E)Thereisnorelationshipbetweenbetaandsensitivitytothebusinesscycle.
Cyclicalstocksaremorevolatilethanthemarketingeneral,andthushavebetasgreaterthan1.0.
17.Iftheeconomyweregoingintoarecession,anattractiveindustrytoinvestinwouldbethe________industry.
A)automobile
B)medicalservices
C)construction
D)AandC
Medicalservicesarenecessities,andthusperformaboutthesameregardlessofthebusinesscycle.Automobileandconstructionindustriesarecyclical,andperformpoorlyduringrecessions.
18.Thestockpriceindexandcontractsandnewordersfornondefensecapitalgoodsare
A)leadingeconomicindicators.
B)coincidentaleconomicindicators.
C)laggingeconomicindicators.
D)notusefulaseconomicindicators.
Contractsandordersforplantandequipmentareindicativeoffutureeconomictimes,andthusareleadingeconomicindicators.Thestockpriceindexisoneofthebestleadingeconomicindicators,areflectionofmarketefficiency.
19.Afirmintheearlystagesoftheindustrylifecyclewilllikelyhave________.
A)highmarketpenetration.
B)highrisk.
C)rapidgrowth
Intheearlystagesoftheindustrylifecycle,thefirmislikelytobehighinrisk.
20.AssumetheU.S.governmentwastodecidetoincreasethebudgetdeficit.Thisactionwillmostlikelycause__________toincrease
A)interestrates
B)governmentborrowing
C)unemployment
D)bothAandB
Increasingthedeficitraisesgovernmentborrowing,increasesthedemandforfundsandthusincreasestheinterestrates.Deficitspendingisalsousedtostimulatetheeconomybyencouragingincreasingtheoutputofeconomy.
21.AssumetheU.S.governmentwastodecidetodecreasethebudgetdeficit.Thisactionwillmostlikelycause__________todecrease
decreasingthedeficitlowersgovernmentborrowing,decreasesthedemandforfundsandthusdecreasestheinterestrates.
22.AssumethattheFederalReservedecreasesthemoneysupply.Thisactionwillcause________todecrease.
B)theunemploymentrate
C)investmentintheeconomy
D)tradebalance
Decreasingthemoneysupplyisaneconomiccontractionstrategy,resultinginadecreasedoutputoftheeconomy.
23.Ifthecurrencyofyourcountryisdepreciating,theresultshouldbeto______exportsandto_______imports.
A)stimulate,stimulate
B)stimulate,discourage
C)discourage,stimulate
D)discourage,discourage
E)notaffect,notaffect
Moderate