Macroeconomics & Market Analysis Flashcards
7 cards from real AIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Macroeconomics & Market Analysis flashcards as text
In fundamental analysis, the price-to-earnings (P/E) ratio is used to:
Answer: Assess how much investors pay per dollar of earnings
The P/E ratio divides a stock's market price by its earnings per share, showing how much investors are willing to pay for each dollar of earnings.
Which of the following best describes 'quantitative easing' (QE) as a monetary policy tool?
Answer: The central bank purchasing large quantities of assets to inject liquidity
Quantitative easing involves a central bank purchasing financial assets (typically government bonds) to increase money supply and stimulate economic activity when conventional rate cuts are insufficient.
The GDP deflator differs from the CPI in that it:
Answer: Covers all goods and services produced domestically, not just consumer goods
The GDP deflator measures price changes for all domestically produced goods and services, while the CPI tracks only a fixed basket of consumer goods.
When analyzing equity markets, 'sector rotation' refers to:
Answer: Shifting investment allocations between sectors based on the business cycle stage
Sector rotation is an active strategy of moving investments between economic sectors that historically outperform at different stages of the business cycle.
What is the primary purpose of the FOMC (Federal Open Market Committee)?
Answer: Making key decisions about U.S. monetary policy and the federal funds rate
The FOMC is the policy-making body of the Federal Reserve responsible for setting the target federal funds rate and directing open market operations.
Which of the following is an example of a lagging economic indicator?
Answer: Average duration of unemployment
The average duration of unemployment is a lagging indicator because it reflects labor market conditions that change only after the broader economy has already shifted direction.
In the context of market analysis, 'technical analysis' primarily relies on:
Answer: Studying price charts and trading volume patterns to forecast future price movements
Technical analysis uses historical price and volume data, charted patterns, and statistical indicators to predict future security price movements.