bloomberg market concepts Questions And Answers With Verified Study Solutions

How accurately do GDP portray the economy and why? - Answer-Inaccurately because the scope of GDP measurements can change. Consider the formula GDP = C+I+G+(X-M). A country is undergoing a boom in consumption of domestic and foreign luxury goods. In one year, the dollar growth in imports is greater than the dollar growth in domestic consumption. Assuming nothing else has changed, what happened to GDP? - Answer-It went down what is the meaning of each letter in the GDP formula, C+I+G+(X-M). - Answer-C= Consumer spending I = Investment (Gross Fixed Capital Formation) G= Government Spending X= Exports M= Imports Here is the most important economic data for Australia and Sweden. which economy did better yearover-year (YOY) in the fourth quarter of 2013 compared to the fourth quarter of 2012? Use the two charts to investigate. - Answer-Sweden performed better In the United States, why is there a strong correlation between unemployment and GDP? - AnswerConsumer spending accounts for two-thirds of the U.S. economy when the number of unemployed consumers rises, there is less consumer spending. Here is a chart showing both nominal GDP growth and real GDP growth for a country. Which of the following can be a true statement at the time the chart was captured? - Answer-The country has deflation. The bottom line is nominal growth and the top line is real growth. Which of the following lines is the best leading economic indicator? - Answer-PMI What typically happens to nonfarm payrolls, the PMI indicator, and housing starts at the onset of a recession in the United States? - Answer-Nonfarm payrolls go down, the PMI indicator goes DOWN, the housing starts goes down.Which of the following qualities of economic indicators do investors prize the most? - Answer-Timeliness of release Why is the release of GDP statistics less interesting to investors than the release of other economic indicators? - Answer-Because GDP statistics are released well after other economic indicators. Which of the following important U.S. economic indicators is only available on a quarterly basis? - Answer-GDP Which economic indicator is most directly linked to unemployment? - Answer-nonfarm payrolls What is the main reason that investment banks create estimates of economic indicators? - Answer-To know when specific economic data points are a positive or negative surprise. Which of the following is the biggest pitfall of economic indicators? - Answer-They do not consistently presage turning points. Which country is the fourth biggest importer and exporter? - Answer-Japan Which of the following is not an example of a failed peg? - Answer-Hong Kong dollar against the U.S. dollar in 1997. What generally happens when a central bank unexpectedly increases interest rates? - Answer-The currency strengthens. Which driver weakened the Swiss franc? - Answer-A surprise change in inflation expectations What does the Big Mac index show? - Answer-How currencies may be overvalued or undervalued. Which of the following are short-term drivers of currency valuation? - Answer-Surprise changes in interest rates, inflation, and trade.By what mechanism do interest rates affect currency values? - Answer-Global investors are attracted by higher bond yields in high interest rate countries. Which of these headlines could move a currency pair? - Answer-U.S. Stocks rally on Fed's Surprise reduction of Interest Rate.