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Supply-side economics tends to focus on ________.


A) government spending
B) price controls
C) monetary policy
D) increasing productive capacity

E) A) and B)
F) All of the above

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Which industry had the highest ROE in 2016 according to the text?


A) electric utilities
B) business software
C) aerospace
D) money center banks

E) All of the above
F) A) and D)

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


A) start-up
B) consolidation
C) maturity
D) relative decline

E) C) and D)
F) None of the above

Correct Answer

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Which one of the following stocks represents industries with below-average sensitivity to the state of the economy?


A) financials
B) technology
C) food and beverage
D) cyclicals

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

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Which of the following are examples of cyclical industries? I. Washing Machines II. Computer chip manufacturers III. Kellogg's Frosted Flakes IV. Pfizer


A) I and II only
B) I, II, and III only
C) II, III, and IV only
D) I, II, III, and IV

E) None of the above
F) All of the above

Correct Answer

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You can earn abnormal returns on your investments via macro forecasting ________.


A) if you can forecast the economy at all
B) if you can forecast the economy as well as the average forecaster
C) if you can forecast the economy better than the average forecaster
D) only if you can forecast the economy with perfect accuracy

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

Correct Answer

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If the currency of your country is depreciating, this should ________ exports and ________ imports.


A) stimulate; stimulate
B) stimulate; discourage
C) discourage; stimulate
D) discourage; discourage

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

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The most widely used monetary policy tool is ________.


A) altering the discount rate
B) altering reserve requirements
C) open market operations
D) increasing the budget deficit

E) B) and D)
F) None of the above

Correct Answer

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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 start-up stage.


A) 4 and 7
B) 1 and 4
C) 2 and 5
D) none of these options

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

Correct Answer

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Which of the following industries would most analysts classify as mature?


A) internet service providers
B) biotechnology
C) wireless communication
D) auto manufacturing

E) All of the above
F) A) and B)

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The average duration of unemployment is ________.


A) a leading economic indicator
B) a coincidental economic indicator
C) a lagging economic indicator
D) both a coincidental indicator and a lagging indicator

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

Correct Answer

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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. Which of the characteristics would be typical of an industry that is in the maturity stage?


A) 1, 2, and 3
B) 4 and 5
C) 6, 7, and 8
D) all of these options

E) A) and B)
F) None of the above

Correct Answer

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Which of the following are barriers to entry? I. Large economies of scale required to be profitable II. Established brand loyalty III. Patent protection for the firm's product IV. Rapid industry growth


A) I and II only
B) I, II, and III only
C) II, III, and IV only
D) III and IV only

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

Correct Answer

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Attempting to forecast future earnings and dividends is consistent with which of the following approaches to securities analysis?


A) technical analysis
B) fundamental analysis
C) both technical analysis and fundamental analysis
D) indexing

E) B) and C)
F) All of the above

Correct Answer

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The yield curve spread between the 10-year T-bond yield and the federal funds rate is a ________ economic indicator.


A) leading
B) lagging
C) coincident
D) mixed

E) None of the above
F) A) and D)

Correct Answer

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Which of the following describes the rate at which your ability to purchase grows while you hold an interest-earning investment?


A) the nominal exchange rate
B) the nominal interest rate
C) the real exchange rate
D) the real interest rate

E) A) and B)
F) None of the above

Correct Answer

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The stock price index and contracts and orders for nondefense capital goods are ________.


A) leading economic indicators
B) coincidental economic indicators
C) lagging economic indicators
D) leading and coincidental indicators, respectively

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

Correct Answer

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If the economy is going into a recession, a good industry to invest in would be the ________ industry.


A) automobile
B) banking
C) construction
D) medical services

E) None of the above
F) All of the above

Correct Answer

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An expanding economy puts stress on the manufacturing ability of a company. When a firm turns business down during periods of economic expansion, a problem exists in the area of ________.


A) asset allocation
B) capacity utilization
C) employment management
D) strategic planning

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

Correct Answer

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What economic variable is most closely associated with increasing corporate profits?


A) exchange rates
B) inflation
C) gross domestic product
D) budget deficits

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

Correct Answer

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