Quiz-summary
0 of 10 questions completed
Questions:
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
Information
Certdemy Free Practice Questions
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
- Not categorized 0%
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- Answered
- Review
-
Question 1 of 10
1. Question
Which of the following statements is true regarding business cycle?
I. Business cycle refers to the various stages of growth and retraction in an economy
II. The economy is at the top of its cycle
III. Recessions are often seen during the troughs of economic times.
IV. The peak stage is the very top of the business cycleCorrect
Business cycle
Business cycle refers to the various stages of growth and retraction in an economy. The four stages are as follows: In contraction, growth in the economy has begun to slow, and decline sets in. In a trough, the decline has ended. The economy is at the bottom of its cycle and will go no lower. Recessions are often seen during the troughs of economic times. In expansion, growth is again happening in the economy, and businesses are investing. This stage does not see a stop in growth. The peak stage is the very top of the business cycle. Growth has been the norm for so long that many investors overlook plain economic indicators and continue investing at or past the peak to their detriment.Incorrect
Business cycle
Business cycle refers to the various stages of growth and retraction in an economy. The four stages are as follows: In contraction, growth in the economy has begun to slow, and decline sets in. In a trough, the decline has ended. The economy is at the bottom of its cycle and will go no lower. Recessions are often seen during the troughs of economic times. In expansion, growth is again happening in the economy, and businesses are investing. This stage does not see a stop in growth. The peak stage is the very top of the business cycle. Growth has been the norm for so long that many investors overlook plain economic indicators and continue investing at or past the peak to their detriment. -
Question 2 of 10
2. Question
Which of the following statements is true regarding monetary policy and fiscal policy?
I. Monetary policy is the means by which the monetary authority (central bank, currency board, etc.) regulate the money supply
II. This affects not only the growth and size of the supply but also in turn the interest rates
III. Monetary policy in the United States is set by the Federal Reserve Board (FRB
IV. The FRB’s policies are primarily executed by affecting long- term interest ratesCorrect
Monetary policy and fiscal policy
Monetary policy is the means by which the monetary authority (central bank, currency board, etc.) regulate the money supply. This affects not only the growth and size of the supply but also in turn the interest rates. Monetary policy in the United States is set by the Federal Reserve Board (FRB). The FRB’s policies are primarily executed by affecting short- term interest rates. The term fiscal policy refers to the government’s ability to tax its constituency and spend that revenue to affect the economy.Incorrect
Monetary policy and fiscal policy
Monetary policy is the means by which the monetary authority (central bank, currency board, etc.) regulate the money supply. This affects not only the growth and size of the supply but also in turn the interest rates. Monetary policy in the United States is set by the Federal Reserve Board (FRB). The FRB’s policies are primarily executed by affecting short- term interest rates. The term fiscal policy refers to the government’s ability to tax its constituency and spend that revenue to affect the economy. -
Question 3 of 10
3. Question
Which of the following statements is true regarding fiscal policy?
I. The term fiscal policy refers to the firm’s ability to tax its constituency and spend that revenue to affect the economy
II. Fiscal policy in the United States is determined by lawmakers or Congress
III. The key difference between monetary policy and fiscal policy are the organizations regulating each
IV. Fiscal policy is legislated through publicCorrect
Fiscal policy
The term fiscal policy refers to the government’s ability to tax its constituency and spend that revenue to affect the economy. In this way, the government is able to affect, if not change, the various stages of the business cycle. Fiscal policy in the United States is determined by lawmakers or Congress. The key difference between monetary policy and fiscal policy are the organizations regulating each. Monetary policy in the United States is set and enacted by the Federal Reserve Bank. Fiscal policy is legislated through Congress. Each new piece of fiscal policy must be voted on and passed in Congress. Monetary policy need not be ratified.Incorrect
Fiscal policy
The term fiscal policy refers to the government’s ability to tax its constituency and spend that revenue to affect the economy. In this way, the government is able to affect, if not change, the various stages of the business cycle. Fiscal policy in the United States is determined by lawmakers or Congress. The key difference between monetary policy and fiscal policy are the organizations regulating each. Monetary policy in the United States is set and enacted by the Federal Reserve Bank. Fiscal policy is legislated through Congress. Each new piece of fiscal policy must be voted on and passed in Congress. Monetary policy need not be ratified. -
Question 4 of 10
4. Question
Which of the following statements is true regarding affect of global exchange rates on investment returns?
I. The strength or weakness of the domestic currency affects one’s investment portfolio, even a portfolio purely comprised of domestic investments
II. If a given business sells exported goods priced in USD to foreign countries, then a stronger dollar will relatively lower demand for that business’s exports
III. The same is true in reverse for a stronger dollar, which could comparatively decrease demand for that business’s goods in foreign countries
IV. The effect of exchange rates for investments held in foreign currencies is more directCorrect
Affect of global exchange rates on investment returns
The strength or weakness of the domestic currency affects one’s investment portfolio, even a portfolio purely comprised of domestic investments. If a given business sells exported goods priced in USD to foreign countries, then a stronger dollar will relatively lower demand for that business’s exports. The same is true in reverse for a weaker dollar, which could comparatively increase demand for that business’s goods in foreign countries. Besides this, the effect of exchange rates for investments held in foreign currencies is more direct, as an increase in the strength of a foreign currency relative to the domestic currency will directly cause that investment’s value to increase.Incorrect
Affect of global exchange rates on investment returns
The strength or weakness of the domestic currency affects one’s investment portfolio, even a portfolio purely comprised of domestic investments. If a given business sells exported goods priced in USD to foreign countries, then a stronger dollar will relatively lower demand for that business’s exports. The same is true in reverse for a weaker dollar, which could comparatively increase demand for that business’s goods in foreign countries. Besides this, the effect of exchange rates for investments held in foreign currencies is more direct, as an increase in the strength of a foreign currency relative to the domestic currency will directly cause that investment’s value to increase. -
Question 5 of 10
5. Question
Which of the following statements is true regarding Sovereign debt?
I. Sovereign debt is debt issued by a sovereign government to foreign issuers, or what might be called external sovereign debt
II. Sovereign debt is characterized by being unsecured, for creditors cannot claim government assets in the event of default
III. The value of any given sovereign debt depends rather heavily on that nation’s particular political and economic milieu
IV. Sovereign debtors keep control over the currency in which their debt is denominatedCorrect
Sovereign debt
Sovereign debt is debt issued by a sovereign government (i.e. not a mere municipality or local government) to foreign issuers, or what might be called external sovereign debt. Sovereign debt is characterized by being unsecured, for creditors cannot claim government assets in the event of default. The value of any given sovereign debt depends rather heavily on that nation’s particular political and economic milieu, with less stable nations therefore requiring higher interest rates to persuade foreign creditors to invest in them. This can lead to crises, for unlike government debt to domestic creditors, sovereign debtors lack control over the currency in which their debt is denominated, which otherwise allows governments to resolve domestic debt issues.Incorrect
Sovereign debt
Sovereign debt is debt issued by a sovereign government (i.e. not a mere municipality or local government) to foreign issuers, or what might be called external sovereign debt. Sovereign debt is characterized by being unsecured, for creditors cannot claim government assets in the event of default. The value of any given sovereign debt depends rather heavily on that nation’s particular political and economic milieu, with less stable nations therefore requiring higher interest rates to persuade foreign creditors to invest in them. This can lead to crises, for unlike government debt to domestic creditors, sovereign debtors lack control over the currency in which their debt is denominated, which otherwise allows governments to resolve domestic debt issues. -
Question 6 of 10
6. Question
Which of the following statements is true regarding strong dollar?
I. A strong dollar is a dollar (or unit of currency) that can be exchanged for greater amounts of foreign currency than its present value
II. When a specific country’s currency is stronger than other countries’ currencies with whom the country transacts business, imports tend to be available more cheaply
III. Exports suffer because the country with the stronger currency tends to buy its goods domestically as it does not lose value in currency conversion at home
IV. A strong dollar is necessarily good for an economy as it tends to speed growth by hindering sales of exportsCorrect
Strong dollar
A strong dollar is a dollar (or unit of currency) that can be exchanged for greater amounts of foreign currency than its present value. When a specific country’s currency is stronger than other countries’ currencies with whom the country transacts business, imports tend to be available more cheaply because the country with the stronger currency can exchange it for more of the foreign currency. Exports suffer because the country with the weaker currency tends to buy its goods domestically as it does not lose value in currency conversion at home. A strong dollar is not necessarily good for an economy as it tends to slow growth by hindering sales of exports.Incorrect
Strong dollar
A strong dollar is a dollar (or unit of currency) that can be exchanged for greater amounts of foreign currency than its present value. When a specific country’s currency is stronger than other countries’ currencies with whom the country transacts business, imports tend to be available more cheaply because the country with the stronger currency can exchange it for more of the foreign currency. Exports suffer because the country with the weaker currency tends to buy its goods domestically as it does not lose value in currency conversion at home. A strong dollar is not necessarily good for an economy as it tends to slow growth by hindering sales of exports. -
Question 7 of 10
7. Question
Which of the following statements is true regarding weak dollar?
I. A weak dollar is a dollar (or unit of currency) that can not be exchanged for smaller amounts of foreign currency than its present value
II. When a specific country’s currency is weaker than other countries’ currencies with whom the country transacts business, its exports tend to sell more frequently
III. The countries with stronger currencies effectively buy the exports at a discount, given that their currencies are worth more than the selling country
IV. A weak dollar is necessarily good for an economy as it tends to stimulate growth by raising demand for exports due to their low costCorrect
Weak dollar
A weak dollar is a dollar (or unit of currency) that can only be exchanged for smaller amounts of foreign currency than its present value. When a specific country’s currency is weaker than other countries’ currencies with whom the country transacts business, its exports tend to sell more frequently. This is due to the fact that the countries with stronger currencies effectively buy the exports at a discount, given that their currencies are worth more than the selling country. The country with the weaker currency imports less due to the imports requiring more of the weaker currency; thus the imports sell at a premium. A weak dollar is not necessarily bad for an economy as it tends to stimulate growth by raising demand for exports due to their low cost.Incorrect
Weak dollar
A weak dollar is a dollar (or unit of currency) that can only be exchanged for smaller amounts of foreign currency than its present value. When a specific country’s currency is weaker than other countries’ currencies with whom the country transacts business, its exports tend to sell more frequently. This is due to the fact that the countries with stronger currencies effectively buy the exports at a discount, given that their currencies are worth more than the selling country. The country with the weaker currency imports less due to the imports requiring more of the weaker currency; thus the imports sell at a premium. A weak dollar is not necessarily bad for an economy as it tends to stimulate growth by raising demand for exports due to their low cost. -
Question 8 of 10
8. Question
Which of the following statements is true regarding relationship of inflation to GDP?
I. Inflation is the chronologically regular, systematic decrease in the money supply or in general price levels
II. Gross domestic product (GDP) consists of the split single production of a given economy
III. If the GDP is declining, the economy is not growing, and companies are not able to expand their profits or benefit investors
IV. If GDP is racing skyward and inflation paces it, investors’ funds are losing purchasing power because of the increase in general price levelsCorrect
Relationship of inflation to GDP
Inflation is the chronologically regular, systematic increase in the money supply or in general price levels. Gross domestic product (GDP) consists of the collective total production of a given economy. If the GDP is declining, or even keeping an even pace, the economy is not growing, and companies are not able to expand their profits or benefit investors. Too much growth in GDP, however, is also not good for the economy. Inflation tends to keep pace with GDP. If GDP is racing skyward and inflation paces it, investors’ funds are losing purchasing power because of the increase in general price levels.Incorrect
Relationship of inflation to GDP
Inflation is the chronologically regular, systematic increase in the money supply or in general price levels. Gross domestic product (GDP) consists of the collective total production of a given economy. If the GDP is declining, or even keeping an even pace, the economy is not growing, and companies are not able to expand their profits or benefit investors. Too much growth in GDP, however, is also not good for the economy. Inflation tends to keep pace with GDP. If GDP is racing skyward and inflation paces it, investors’ funds are losing purchasing power because of the increase in general price levels. -
Question 9 of 10
9. Question
Which of the following statements is true regarding interest rates and yield curves?
I. Bond values have an inverse relationship to the yield the bond pays
II. In a rising interest rate environment, new bonds produce lower yields for the same outlay of principal to the investor
III. This increases the demand for existing bonds, and the value falls accordingly
IV. Conversely, in a falling interest rate environment, investors are willing to pay more to receive the higher yields produced by existing bondsCorrect
Interest rates and yield curves
Bond values have an inverse relationship to the yield the bond pays. In a rising interest rate environment, new bonds produce higher yields for the same outlay of principal to the investor. This decreases the demand for existing bonds, and the value falls accordingly. Conversely, in a falling interest rate environment, investors are willing to pay more to receive the higher yields produced by existing bonds. Because yield is a function of the amount invested and the coupon received, the yield curve also moves with interest rates.Incorrect
Interest rates and yield curves
Bond values have an inverse relationship to the yield the bond pays. In a rising interest rate environment, new bonds produce higher yields for the same outlay of principal to the investor. This decreases the demand for existing bonds, and the value falls accordingly. Conversely, in a falling interest rate environment, investors are willing to pay more to receive the higher yields produced by existing bonds. Because yield is a function of the amount invested and the coupon received, the yield curve also moves with interest rates. -
Question 10 of 10
10. Question
Which of the following statements is true regarding interest rates and yield curves?
I. Short-term bond values tend not to move as dramatically as long-term bond values
II. They can be redeemed at par value much more quickly and reinvested in higher-yielding securities if interest rates rise
III. This also results in a lower coupon (less yield) as the interest rate expense is much lower than with long-term bonds
IV. Short-term values (and thus their respective yields), however, tend to be more volatile as they are inflexible due to their longer durationsCorrect
Interest rates and yield curves
Short-term bond values tend not to move as dramatically as long-term bond values due to the fact that they can be redeemed at par value much more quickly and reinvested in higher-yielding securities if interest rates rise. This also results in a lower coupon (less yield) as the interest rate expense is much lower than with long-term bonds. Long-term values (and thus their respective yields), however, tend to be more volatile as they are inflexible due to their longer durations. This volatility results in higher yields being paid. This results in a normal yield curve, having an upward sloping shape, with lower yields corresponding to short-term bonds and higher yields corresponding to long-term bonds.Incorrect
Interest rates and yield curves
Short-term bond values tend not to move as dramatically as long-term bond values due to the fact that they can be redeemed at par value much more quickly and reinvested in higher-yielding securities if interest rates rise. This also results in a lower coupon (less yield) as the interest rate expense is much lower than with long-term bonds. Long-term values (and thus their respective yields), however, tend to be more volatile as they are inflexible due to their longer durations. This volatility results in higher yields being paid. This results in a normal yield curve, having an upward sloping shape, with lower yields corresponding to short-term bonds and higher yields corresponding to long-term bonds.