Chapter 29

Tying It All Together

D1Factual
1. An unexpected fall in durable goods orders should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
. An unexpected rise in !D" growth should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
#. An unexpected fall in !D" growth should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
$. An unexpected fall in car sales should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

110

111%itter&'ilber&(dell Money, Banking, and Financial Markets ) *le+enth *dition

D1Factual
,. An unexpected rise in the "urchasing -anagers. /ndex should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
0. An unexpected fall in the "urchasing -anagers. /ndex should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
1. An unexpected fall in %etail 'ales should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
2. An unexpected rise in %etail 'ales should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
3. An unexpected rise in Capacit4 (tili5ation should send bond prices __________________ and stock prices __________________ A) up; up B) up; down C) down; up D) down; down Answer: C

Chapter 364ing /t All 6ogether 112

D1Factual
17. An unexpected fall in Capacit4 (tili5ation should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
11. A drop in Durable !oods 8rders should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
1 . A rise in Durable !oods 8rders should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
1#. An unexpected rise in 9ew :o;e 'ales should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
1$. An unexpected fall in 9ew :o;e 'ales should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

113%itter&'ilber&(dell Money, Banking, and Financial Markets ) *le+enth *dition

D1Factual
1,. An unexpected fall in :ousing 'tarts should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
10. An unexpected rise in :ousing 'tarts should send bond prices __________________ and stock prices __________________ A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
11. An unexpected rise in the <*/ should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
12. An unexpected drop in the <*/ should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: B

D1Factual
13. An unexpected rise in the growth rate of the C"/ should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: D

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D1Factual
7. An unexpected drop in the growth rate of the C"/ should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: A

D1Factual
1. An unexpected rise in the "roducer "rice /ndex should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: D

D1Factual
. An unexpected fall in the "roducer "rice /ndex should send bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: A

D1Factual
#. 6he Bureau of <abor 'tatistics un+eils an une;plo4;ent rate figure e+er4 A) two weeks. B) ;onth. C) two ;onths. D) =uarter. Answer: B

D1Interpretive
$. >hich of these indicators is probabl4 the ;ost politicall4 sensiti+e? A) :ousing starts B) Capacit4 utili5ation C) *;plo4;ent D) Car sales Answer: C

115%itter&'ilber&(dell Money, Banking, and Financial Markets ) *le+enth *dition

D1Factual
,. A household sur+e4 is used to calculate A) the une;plo4;ent rate. B) the le+el of pa4roll e;plo4;ent. C) both the une;plo4;ent rate and the le+el of pa4roll e;plo4;ent. D) neither the une;plo4;ent rate nor the le+el of pa4roll e;plo4;ent. Answer: A

D1Factual
0. An establish;ent sur+e4 is used to calculate A) the une;plo4;ent rate. B) the le+el of pa4roll e;plo4;ent. C) both the une;plo4;ent rate and the le+el of pa4roll e;plo4;ent. D) neither the une;plo4;ent rate nor the le+el of pa4roll e;plo4;ent. Answer: B

D2Factual
1. >hich of the following is a lagging econo;ic indicator? A) :ousing starts B) *;plo4;ent C) %etail sales D) /nflation Answer: B

D1Factual
2. 6he B<' ;onthl4 household sur+e4 in+ol+es about __________________ households in the (nited 'tates. A) 0)777 B) 07)777 C) 077)777 D) 0)777)777 Answer: B

D2Applied
3. 'uppose a nation has a total population of 177)777)777. 8ut of that) 07@ are in the labor force and ,,)777)777 people are e;plo4ed. >hat is the nation.s une;plo4;ent rate? A) ,.7@ B) 2.#@ C) 3.1@ D) 17.3@ Answer: B

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D2Applied
#7. 'uppose a nation has a total population of ,7)777)777. 8ut of that) ,7@ are in the labor force and #)777)777 people are e;plo4ed. >hat is the nation.s une;plo4;ent rate? A) $.7@ B) 2.7@ C) 1 @ D) 1$@ Answer: B

D2Applied
#1. 'uppose a nation has a total population of 177)777)777. 8ut of that) 17@ are in the labor force and 0,@ of the population is e;plo4ed. >hat is the nation.s une;plo4;ent rate? A) ,.7@ B) 1.1@ C) 1.1@ D) #7.7@ Answer: B

D2Interpretive
# . 'uppose that during a gi+en ;onth ,77)777 persons =uit their Aob to beco;e selfBe;plo4ed. 6his ;ight gi+e __________________ bias to the __________________ indicator. A) an opti;istic; une;plo4;ent rate B) a pessi;istic; une;plo4;ent rate C) an opti;istic; pa4roll e;plo4;ent D) a pessi;istic; pa4roll e;plo4;ent Answer: D

D2Interpretive
##. 'uppose that during a gi+en ;onth 77)777 persons who had been selfBe;plo4ed lea+e their business and get Aobs working for other businesses. 6his ;ight gi+e __________________ bias to the __________________ indicator. A) an opti;istic; une;plo4;ent rate B) a pessi;istic; une;plo4;ent rate C) an opti;istic; pa4roll e;plo4;ent D) a pessi;istic; pa4roll e;plo4;ent Answer: C

D2Interpretive
#$. 'uppose that during a gi+en ;onth ,77)777 persons =uit their Aob to beco;e selfBe;plo4ed. 6his will cause A) the une;plo4;ent rate to fall. B) the une;plo4;ent rate to rise. C) pa4roll e;plo4;ent to rise. D) pa4roll e;plo4;ent to fall. *) no change in either the une;plo4;ent rate or pa4roll e;plo4;ent. Answer: D

117%itter&'ilber&(dell Money, Banking, and Financial Markets ) *le+enth *dition

D2Interpretive
#,. 'uppose that during a gi+en ;onth 77)777 persons who had been selfBe;plo4ed lea+e their business and get Aobs working for other businesses. 6his will cause A) the une;plo4;ent rate to rise. B) the une;plo4;ent rate to fall. C) pa4roll e;plo4;ent to rise. D) pa4roll e;plo4;ent to fall. *) no change in either the une;plo4;ent rate or pa4roll e;plo4;ent. Answer: C

D2Factual
#0. A person with two Aobs is counted __________________ in the household sur+e4 and __________________ in the establish;ent sur+e4. A) once; once B) once; twice C) twice; once D) twice; twice Answer: B

D1Factual
#1. C:ousing startsD is __________________ indicator. A) a leading B) a coincident C) a lagging D) an inconsistent Answer: A

D2Factual
#2. A reduction in housing starts) t4picall4 due to __________________ interest rates) is often thought to precede __________________. A) rising; an expansion B) rising; a recession C) falling; an expansion D) falling; a recession Answer: B

D2Factual
#3. An increase in housing starts) t4picall4 due to __________________ interest rates) is often thought to precede __________________. A) rising; an expansion B) rising; a recession C) falling; an expansion D) falling; a recession Answer: C

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D1Factual
$7. 6he "urchasing -anagersE /ndex is __________________ indicator. A) a leading B) a coincident C) a lagging D) an inconsistent Answer: B

D2Factual
$1. A "urchasing -anagerEs /ndex abo+e ,7 indicates A) an expanding ;anufacturing sector. B) a downturn in econo;ic acti+it4. C) an increase in bond prices in the near future. D) an expanding retail sector. Answer: A

D2Factual
$ . A "urchasing -anagerEs /ndex below ,7 indicates A) a declining retail sector. B) a downturn in econo;ic acti+it4. C) an increase in bond prices in the near future. D) a declining ;anufacturing sector. Answer: D

D1Factual
$#. <eading econo;ic indicators are econo;ic indicators that __________________ changes in econo;ic acti+it4 A) change after B) change at the sa;e ti;e as C) change before D) 9one of the abo+e Answer: C

D1Factual
$$. >hich of the following is not in the index of leading econo;ic indicators? A) A+erage workweek B) /nitial une;plo4;ent clai;s C) Building per;its D) "roducer price index Answer: D

119%itter&'ilber&(dell Money, Banking, and Financial Markets ) *le+enth *dition

D1Factual
$,. /t takes __________________ consecuti+e ;onthl4 changes in the <*/ before a change in econo;ic acti+it4 is being foreshadowed. A) two B) three C) four D) six Answer: B

D1Factual
$0. C!ood newsD about an expenditureBrelated indicator dri+es bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
$1. CBad newsD about an expenditureBrelated indicator dri+es bond prices __________________ and stock prices __________________. A) up; up B) up; down C) down; up D) down; down Answer: C

D1Factual
$2. C!ood newsD about an expenditureBrelated indicator ;eans that A) it is higher than its pre+ious +alue. B) it is higher than it was expected to be. C) it is lower than its pre+ious +alue. D) it rose faster than the rate of inflation. Answer: B

D1Factual
$3. CBad newsD about an expenditureBrelated indicator ;eans that A) it is lower than its pre+ious +alue. B) it is lower that it was expected to be. C) it is higher than it was expected to be. D) it rose ;ore slowl4 than the rate of inflation. Answer: B

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D3Applied
,7. A tenB4ear F1)777)777BfaceB+alue 5eroBcoupon 6reasur4 bond has a ;arket price of __________________ when the interest rate is 3.0 @. A) F#33)113 B) F01$)2$$ C) F37#)277 D) F30 )777 Answer: A

D2Applied
,1. A tenB4ear F1)777)777BfaceB+alue 5eroBcoupon 6reasur4 bond has a ;arket price of __________________ when the interest rate is 0.#$@. A) F#00)777 B) F3#0)077 C) F12$)37 D) F,$7)130 Answer: D

D2Applied
, . Gor a tenB4ear F1)777)777BfaceB+alue 5eroBcoupon 6reasur4 bond) how does its ;arket price change when the interest rate goes fro; 0.2$@ to 0.3 @? A) A fall of F113 B) A fall of F#2$2 C) A fall of F2777 D) A rise of F2777 Answer: B

D1Factual
,#. 9ews about __________________ sends stock and bond prices in the sa;e direction. A) so;e expenditure indicators B) !D" C) inflation D) capacit4 utili5ation Answer: C

D2Applied
,$. A share of stock expected to pa4 an annual di+idend of F17 fore+er has a ;arket price of __________________ when the 6reasur4 bond rate is 0@ and the stock has a risk pre;iu; of $@. A) F177.77 B) F100.01 C) F ,7.77 D) F,77.77 Answer: A

121%itter&'ilber&(dell Money, Banking, and Financial Markets ) *le+enth *dition

D2Applied
,,. A share of stock expected to pa4 an annual di+idend of F1 fore+er has a ;arket price of __________________ when the 6reasur4 bond rate is 0.,@ and the stock has a risk pre;iu; of $.,@. A) F173.73 B) F12$.0 C) F 00.01 D) F077 Answer: A

D2Interpretive
,0. !ood news about an econo;ic indicator ___________________ the deno;inator of a bond.s +aluation for;ula) __________________ the bond.s price. A) raises; raising B) raises; lowering C) lowers; raising D) lowers; lowering Answer: B

D2Interpretive
,1. !ood news about an econo;ic indicator __________________ the deno;inator and __________________ the nu;erator in the stock price +aluation for;ula. A) raises; raises B) raises; lowers C) lowers; raises D) lowers; lowers Answer: A

D1Interpretive
,2. /n the stock +aluation for;ula Cgood newsD affects both the nu;erator and deno;inator. Con+entional wisdo; on >all 'treet is that the effect on the __________________ is __________________ the effect on the __________________ A) nu;erator; less than; deno;inator B) nu;erator; greater than; deno;inator C) nu;erator; the sa;e as; deno;inator D) 9one of the abo+e Answer: B