Question 1

Assume the U.S.government was to decide to decrease the budget deficit.This action will most likely cause __________ to decrease.

Accepted Answer

A) interest rates 
B) government borrowing 
C) unemployment 
D) interest rates and government borrowing 
E) None of the options 
A) interest rates 
B) government borrowing 
C) unemployment 
D) interest rates and government borrowing 
E) None of the options

Question 2

Two firms, A and B, both produce widgets.The price of widgets is $1 each.Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget.Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget.The corporate tax rate is 40%.If the economy is strong, each firm will sell 1,200,000 widgets.If the economy enters a recession, each firm will sell 1,100,000 widgets. If the economy enters a recession, the after-tax profit of Firm A will be

Accepted Answer

A) $0. 
B) $6,000. 
C) $30,000. 
D) $60,000. 
E) None of the options 
A) $0. 
B) $6,000. 
C) $30,000. 
D) $60,000. 
E) None of the options

Question 3

According to Michael Porter, there are five determinants of competition.An example of _____ is when the availability limits the prices that can be charged to customers.

Accepted Answer

A) threat of entry 
B) rivalry between existing competitors 
C) pressure from substitute products 
D) bargaining power of buyers 
E) bargaining power of suppliers 
A) threat of entry 
B) rivalry between existing competitors 
C) pressure from substitute products 
D) bargaining power of buyers 
E) bargaining power of suppliers

Question 4

Two firms, A and B, both produce widgets.The price of widgets is $1 each.Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget.Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget.The corporate tax rate is 40%.If the economy is strong, each firm will sell 1,200,000 widgets.If the economy enters a recession, each firm will sell 1,100,000 widgets. If the economy is strong, the after-tax profit of Firm B will be

Accepted Answer

A) $0. 
B) $6,000. 
C) $36,000. 
D) $60,000. 
A) $0. 
B) $6,000. 
C) $36,000. 
D) $60,000.

Question 5

In the decline stage of the industry life cycle

Accepted Answer

A) the product may have reached obsolescence. 
B) the industry will grow at a rate less than the overall economy. 
C) the industry may experience negative growth. 
D) the product may have reached obsolescence and the industry will grow at a rate less than the overall economy. 
E) the product may have reached obsolescence, the industry will grow at a rate less than the overall economy, and the industry may experience negative growth. 
A) the product may have reached obsolescence. 
B) the industry will grow at a rate less than the overall economy. 
C) the industry may experience negative growth. 
D) the product may have reached obsolescence and the industry will grow at a rate less than the overall economy. 
E) the product may have reached obsolescence, the industry will grow at a rate less than the overall economy, and the industry may experience negative growth.

Question 6

An example of a defensive industry is

Accepted Answer

A) the automobile industry. 
B) the tobacco industry. 
C) the food industry. 
D) the automobile industry and the tobacco industry. 
E) the tobacco industry and the food industry. 
A) the automobile industry. 
B) the tobacco industry. 
C) the food industry. 
D) the automobile industry and the tobacco industry. 
E) the tobacco industry and the food industry.

Question 7

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

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; hold steady 
E) be unaffected; be unaffected 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; hold steady 
E) be unaffected; be unaffected

Question 8

If the economy is growing, firms with high operating leverage will experience

Accepted Answer

A) higher increases in profits than firms with low operating leverage. 
B) similar increases in profits as firms with low operating leverage. 
C) smaller increases in profits than firms with low operating leverage. 
D) no change in profits. 
E) None of the options 
A) higher increases in profits than firms with low operating leverage. 
B) similar increases in profits as firms with low operating leverage. 
C) smaller increases in profits than firms with low operating leverage. 
D) no change in profits. 
E) None of the options

Question 9

GDP refers to

Accepted Answer

A) the amount of personal disposable income in the economy. 
B) the difference between government spending and government revenues. 
C) the total manufacturing output in the economy. 
D) the total production of goods and services in the economy. 
E) None of the options 
A) the amount of personal disposable income in the economy. 
B) the difference between government spending and government revenues. 
C) the total manufacturing output in the economy. 
D) the total production of goods and services in the economy. 
E) None of the options

Question 10

Two firms, C and D, both produce coat hangers.The price of coat hangers is $1.20 each.Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger.Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger.The corporate tax rate is 40%.If the economy is strong, each firm will sell 2,000,000 coat hangers.If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy enters a recession, the before-tax profit of firm C will be

Accepted Answer

A) $1,680,000. 
B) $1,170,000. 
C) $510,000. 
D) $204,000. 
A) $1,680,000. 
B) $1,170,000. 
C) $510,000. 
D) $204,000.

Question 11

The stock price index and new orders for nondefense capital goods are

Accepted Answer

A) leading economic indicators. 
B) coincidental economic indicators. 
C) lagging economic indicators. 
D) not useful as economic indicators. 
A) leading economic indicators. 
B) coincidental economic indicators. 
C) lagging economic indicators. 
D) not useful as economic indicators.

Question 12

An example of a positive demand shock is

Accepted Answer

A) a decrease in the money supply. 
B) a decrease in government spending. 
C) a decrease in foreign export demand. 
D) a decrease in the price of imported oil. 
E) a decrease in tax rates. 
A) a decrease in the money supply. 
B) a decrease in government spending. 
C) a decrease in foreign export demand. 
D) a decrease in the price of imported oil. 
E) a decrease in tax rates.

Question 13

A declining GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales.

Accepted Answer

A) stagnant; little 
B) stagnant; ample 
C) expanding; little 
D) expanding; ample 
E) stable; no 
A) stagnant; little 
B) stagnant; ample 
C) expanding; little 
D) expanding; ample 
E) stable; no

Question 14

According to Michael Porter, there are five determinants of competition.An example of _____ is when new entrants to an industry put pressure on prices and profits.

Accepted Answer

A) threat of entry 
B) rivalry between existing competitors 
C) pressure from substitute products 
D) bargaining power of buyers 
E) bargaining power of suppliers 
A) threat of entry 
B) rivalry between existing competitors 
C) pressure from substitute products 
D) bargaining power of buyers 
E) bargaining power of suppliers

Question 15

Supply-side economists wishing to stimulate the economy are most likely to recommend

Accepted Answer

A) a decrease in the money supply. 
B) a decrease in production output. 
C) an increase in the real interest rate. 
D) a decrease in the tax rate. 
A) a decrease in the money supply. 
B) a decrease in production output. 
C) an increase in the real interest rate. 
D) a decrease in the tax rate.

Question 16

The industry life cycle is described by which of the following stage(s)

Accepted Answer

A) Start-up 
B) Consolidation 
C) Absolute decline 
D) Start-up and consolidation 
E) All of the options 
A) Start-up 
B) Consolidation 
C) Absolute decline 
D) Start-up and consolidation 
E) All of the options

Question 17

A top-down analysis of a firm's prospects starts with

Accepted Answer

A) an examination of the firm's industry. 
B) an evaluation of the firm's position within its industry. 
C) a forecast of interest rate movements. 
D) an assessment of the broad economic environment. 
E) the application of the CAPM to find the firm's theoretical return. 
A) an examination of the firm's industry. 
B) an evaluation of the firm's position within its industry. 
C) a forecast of interest rate movements. 
D) an assessment of the broad economic environment. 
E) the application of the CAPM to find the firm's theoretical return.

Question 18

Two firms, C and D, both produce coat hangers.The price of coat hangers is $1.20 each.Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger.Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger.The corporate tax rate is 40%.If the economy is strong, each firm will sell 2,000,000 coat hangers.If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy enters a recession, the total cost of firm C will be

Accepted Answer

A) $1,680,000. 
B) $1,170,000. 
C) $750,000. 
D) $420,000. 
A) $1,680,000. 
B) $1,170,000. 
C) $750,000. 
D) $420,000.

Question 19

Which of the following are not examples of defensive industries

Accepted Answer

A) Food producers 
B) Durable goods producers 
C) Pharmaceutical firms 
D) Public utilities 
A) Food producers 
B) Durable goods producers 
C) Pharmaceutical firms 
D) Public utilities

Question 20

Two firms, C and D, both produce coat hangers.The price of coat hangers is $1.20 each.Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger.Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger.The corporate tax rate is 40%.If the economy is strong, each firm will sell 2,000,000 coat hangers.If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy is strong, the total cost of firm C will be

Accepted Answer

A) $1,680,000. 
B) $1,170,000. 
C) $1,350,000. 
D) $420,000. 
A) $1,680,000. 
B) $1,170,000. 
C) $1,350,000. 
D) $420,000.

Exam 17: Macroeconomic and Industry Analysis

Assume the U.S.government was to decide to decrease the budget deficit.This action will most likely cause __________ to decrease.

According to Michael Porter, there are five determinants of competition.An example of _____ is when the availability limits the prices that can be charged to customers.

In the decline stage of the industry life cycle

An example of a defensive industry is

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

If the economy is growing, firms with high operating leverage will experience

GDP refers to

The stock price index and new orders for nondefense capital goods are

An example of a positive demand shock is

A declining GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales.

According to Michael Porter, there are five determinants of competition.An example of _____ is when new entrants to an industry put pressure on prices and profits.

Supply-side economists wishing to stimulate the economy are most likely to recommend

The industry life cycle is described by which of the following stage(s)

A top-down analysis of a firm's prospects starts with

Which of the following are not examples of defensive industries

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters

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

A declining GDP indicates a(n) economy with opportunity for a firm to increase sales.