Question 1

Which of the following stock market decreases is best explained by the notion of a bubble collapsing?

Accepted Answer

A) The early 1982 drop in the DJIA. 
B) The decade of the 1970s. 
C) The U.S. stock market in technology stocks in 2000. 
D) The U.S. stock market's drop in late 2008. 
A) The early 1982 drop in the DJIA. 
B) The decade of the 1970s. 
C) The U.S. stock market in technology stocks in 2000. 
D) The U.S. stock market's drop in late 2008. C

Question 2

Suppose an efficient market has been operating with regard to stock in a particular company and that company announces that its profits were down 50% from the previous period but the stock price was unchanged after getting the news on a day when all of the other stocks are barely moving. This is

Accepted Answer

A) absolutely illogical. 
B) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 75% drop. 
C) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 25% drop. 
D) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% drop. 
A) absolutely illogical. 
B) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 75% drop. 
C) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 25% drop. 
D) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% drop. D

Question 3

During 1999, the NASDAQ increased

Accepted Answer

A) 84 fold. 
B) 84%. 
C) 8%. 
D) 4%. 
A) 84 fold. 
B) 84%. 
C) 8%. 
D) 4%. B

Question 4

Which of the following is by considered economists as a fundamental determinant of stock prices?

Accepted Answer

A) Earnings projections 
B) CEO desires 
C) Board of Directors' mandates on stock prices 
D) Securities and Exchange Commission officers 
A) Earnings projections 
B) CEO desires 
C) Board of Directors' mandates on stock prices 
D) Securities and Exchange Commission officers

Question 5

From 1982 until 2000, stock prices rose dramatically. As measured by the Standard and Poor's 500 composite, stocks went from under _____ to above _______ during this period.

Accepted Answer

A) 1,000; 11,000. 
B) 200; 1,400 
C) 400; 5,000 
D) 10,000; 200,000 
A) 1,000; 11,000. 
B) 200; 1,400 
C) 400; 5,000 
D) 10,000; 200,000

Question 6

Economists view corporate bankruptcy as

Accepted Answer

A) a necessary aspect of a capitalist economy. 
B) a socialist intrusion into a capitalist economy. 
C) a means by which the rich get richer. 
D) a means by which the poor get poorer. 
A) a necessary aspect of a capitalist economy. 
B) a socialist intrusion into a capitalist economy. 
C) a means by which the rich get richer. 
D) a means by which the poor get poorer.

Question 7

The collapse of stock prices in the September of 2008 was

Accepted Answer

A) largely due to the sharply increased uncertainty regarding the strategically critical financial sector. 
B) totally irrational and unjustified by any fundamental determinants of stock values. 
C) the result of an elaborate conspiracy by greedy manipulators to ruin the Big Three automakers. 
D) an inescapable consequence of the rebound of 2006-2007. 
A) largely due to the sharply increased uncertainty regarding the strategically critical financial sector. 
B) totally irrational and unjustified by any fundamental determinants of stock values. 
C) the result of an elaborate conspiracy by greedy manipulators to ruin the Big Three automakers. 
D) an inescapable consequence of the rebound of 2006-2007.

Question 8

Which of the following stock market increases is best explained by the notion of a bubble?

Accepted Answer

A) The late 1982 rally in which the DJIA doubled in 4 months. 
B) The decade of the 1980s. 
C) The Japanese stock market in the late 1980s. 
D) The U.S. stock market's growth in 2009. 
A) The late 1982 rally in which the DJIA doubled in 4 months. 
B) The decade of the 1980s. 
C) The Japanese stock market in the late 1980s. 
D) The U.S. stock market's growth in 2009.

Question 9

If stock prices are in-line with their fundamental determinants and interest rates do not change, then a change in the profit expectations by 20%

Accepted Answer

A) will change the stock price by exactly 20% regardless of the expected distribution of the earnings over time. 
B) will change the stock price by less than 20% regardless of the expected distribution of the earnings over time. 
C) will change the stock price by more than 20% regardless of the expected distribution of the earnings over time. 
D) will change the stock price by more or less than 20% depending on the expected distribution of the earnings over time. 
A) will change the stock price by exactly 20% regardless of the expected distribution of the earnings over time. 
B) will change the stock price by less than 20% regardless of the expected distribution of the earnings over time. 
C) will change the stock price by more than 20% regardless of the expected distribution of the earnings over time. 
D) will change the stock price by more or less than 20% depending on the expected distribution of the earnings over time.

Question 10

From 1982 until 2000, stock prices rose dramatically. As measured by the NASDAQ composite, stocks went from under _____ to above _______ during this period.

Accepted Answer

A) 1,000; 11,000 
B) 200; 1,400 
C) 400; 5,000 
D) 10,000; 200,000 
A) 1,000; 11,000 
B) 200; 1,400 
C) 400; 5,000 
D) 10,000; 200,000

Question 11

The increase in stock prices in 2009 and 2010 was

Accepted Answer

A) largely due to the sharply increased uncertainty regarding the strategically critical financial sector. 
B) totally irrational and unjustified by any fundamental determinants of stock values. 
C) the result of an elaborate conspiracy by greedy manipulators to ruin the Big Three automakers. 
D) a consequence of the rebound of those years. 
A) largely due to the sharply increased uncertainty regarding the strategically critical financial sector. 
B) totally irrational and unjustified by any fundamental determinants of stock values. 
C) the result of an elaborate conspiracy by greedy manipulators to ruin the Big Three automakers. 
D) a consequence of the rebound of those years.

Question 12

The increase in stock prices in 2009 and 2010 was

Accepted Answer

A) largely due to the sharply increased uncertainty regarding the strategically critical financial sector. 
B) totally irrational and unjustified by any fundamental determinants of stock values. 
C) the result of an elaborate conspiracy by greedy manipulators to ruin the Big Three automakers. 
D) a consequence of the elimination of the threat of a wider global depression. 
A) largely due to the sharply increased uncertainty regarding the strategically critical financial sector. 
B) totally irrational and unjustified by any fundamental determinants of stock values. 
C) the result of an elaborate conspiracy by greedy manipulators to ruin the Big Three automakers. 
D) a consequence of the elimination of the threat of a wider global depression.

Question 13

Suppose an efficient market has been operating with regard to stock in a particular company and that company announces that its profits were up 50% from the previous period but the stock price was unchanged after getting the news on a day when all of the other stocks are barely moving. This is

Accepted Answer

A) absolutely illogical. 
B) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 75% gains. 
C) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 25% gains. 
D) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% gains. 
A) absolutely illogical. 
B) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 75% gains. 
C) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 25% gains. 
D) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% gains.

Question 14

If interest rates fall and all else is equal, the price of a stock will

Accepted Answer

A) fall. 
B) rise. 
C) remain unchanged. 
D) adjust to reflect a lower ratio of price to (current)earnings. 
A) fall. 
B) rise. 
C) remain unchanged. 
D) adjust to reflect a lower ratio of price to (current)earnings.

Question 15

In an efficient market, an average investor who is outside Wall Street

Accepted Answer

A) must be constantly vigilant by analyzing and adjusting their portfolio to get average returns. 
B) cannot expect to get average returns. 
C) will get average returns in a well-diversified portfolio even without analyzing or managing it. 
D) will habitually exceed average returns. 
A) must be constantly vigilant by analyzing and adjusting their portfolio to get average returns. 
B) cannot expect to get average returns. 
C) will get average returns in a well-diversified portfolio even without analyzing or managing it. 
D) will habitually exceed average returns.

Question 16

Fundamentally a stock price is the _______ future earnings per share.

Accepted Answer

A) sum of expected 
B) present value of expected 
C) future value of expected 
D) present value of only known 
A) sum of expected 
B) present value of expected 
C) future value of expected 
D) present value of only known

Question 17

The use of the "common" logarithm in stock data graph is done to

Accepted Answer

A) confuse the issue. 
B) show the up and down swings in the early years because without it, it just looks like an upward sloping line. 
C) show the up and down swings in the later years because without it, it just looks like an upward sloping line. 
D) show the up and down swings in the middle years because without it, it just looks like an upward sloping line. 
A) confuse the issue. 
B) show the up and down swings in the early years because without it, it just looks like an upward sloping line. 
C) show the up and down swings in the later years because without it, it just looks like an upward sloping line. 
D) show the up and down swings in the middle years because without it, it just looks like an upward sloping line.

Question 18

The 2006-2007 recovery of stock prices from their 2000-2001 collapse was largely a reflection of

Accepted Answer

A) the Democrat sweep of Congress. 
B) the Enron scandals. 
C) increased earnings forecasts and low long-term interest rates. 
D) reduced earnings forecasts and high long-term interest rates. 
A) the Democrat sweep of Congress. 
B) the Enron scandals. 
C) increased earnings forecasts and low long-term interest rates. 
D) reduced earnings forecasts and high long-term interest rates.

Question 19

If a stock market is utilizing all of the available information on earnings projections, interest rates, risk, etc., economists refer to the market as

Accepted Answer

A) proper. 
B) attentive. 
C) efficient. 
D) fully engaged. 
A) proper. 
B) attentive. 
C) efficient. 
D) fully engaged.

Question 20

An S-corporation is designed

Accepted Answer

A) for large new incorporations. 
B) to allow stock sales to other corporate entities. 
C) to allow for unlimited numbers of shareholders. 
D) for small businesses to incorporate. 
A) for large new incorporations. 
B) to allow stock sales to other corporate entities. 
C) to allow for unlimited numbers of shareholders. 
D) for small businesses to incorporate.

Exam 44: The Stock Market Crashes

Which of the following stock market decreases is best explained by the notion of a bubble collapsing?

Suppose an efficient market has been operating with regard to stock in a particular company and that company announces that its profits were down 50% from the previous period but the stock price was unchanged after getting the news on a day when all of the other stocks are barely moving. This is

During 1999, the NASDAQ increased

Which of the following is by considered economists as a fundamental determinant of stock prices?

From 1982 until 2000, stock prices rose dramatically. As measured by the Standard and Poor's 500 composite, stocks went from under _____ to above _______ during this period.

Economists view corporate bankruptcy as

The collapse of stock prices in the September of 2008 was

Which of the following stock market increases is best explained by the notion of a bubble?

If stock prices are in-line with their fundamental determinants and interest rates do not change, then a change in the profit expectations by 20%

From 1982 until 2000, stock prices rose dramatically. As measured by the NASDAQ composite, stocks went from under _____ to above _______ during this period.

The increase in stock prices in 2009 and 2010 was

The increase in stock prices in 2009 and 2010 was

Suppose an efficient market has been operating with regard to stock in a particular company and that company announces that its profits were up 50% from the previous period but the stock price was unchanged after getting the news on a day when all of the other stocks are barely moving. This is

If interest rates fall and all else is equal, the price of a stock will

In an efficient market, an average investor who is outside Wall Street

Fundamentally a stock price is the _______ future earnings per share.

The use of the "common" logarithm in stock data graph is done to

The 2006-2007 recovery of stock prices from their 2000-2001 collapse was largely a reflection of

If a stock market is utilizing all of the available information on earnings projections, interest rates, risk, etc., economists refer to the market as

An S-corporation is designed

Economics: the Study of Opportunity Cost

Supply and Demand

The Concept of Elasticity and Consumer and Producer Surplus

Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

If We Build It, Will They Come and Other Sports Questions

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

Filters

From 1982 until 2000, stock prices rose dramatically. As measured by the Standard and Poor's 500 composite, stocks went from under _ to above ___ during this period.

From 1982 until 2000, stock prices rose dramatically. As measured by the NASDAQ composite, stocks went from under _ to above ___ during this period.