AIP Macroeconomics & Market Analysis

Question 1

Which economic indicator is considered a leading indicator of future economic activity?

Accepted Answer

Building permits issued

Answer

Unemployment rate

Answer

GDP growth rate

Answer

Consumer Price Index

Question 2

When the Federal Reserve raises the federal funds rate, what is the typical immediate effect on bond prices?

Accepted Answer

Bond prices fall

Answer

Bond prices rise

Answer

Bond prices remain unchanged

Answer

Bond prices become more volatile but direction is unclear

Question 3

Which phase of the business cycle is characterized by rising employment, increasing consumer spending, and growing GDP?

Accepted Answer

Expansion

Answer

Contraction

Answer

Trough

Answer

Peak

Question 4

What does the yield curve inversion (short-term rates exceeding long-term rates) historically signal?

Accepted Answer

A potential recession in the near future

Answer

Strong economic growth ahead

Answer

Rising inflation expectations

Answer

Increased foreign investment

Question 5

The Consumer Price Index (CPI) primarily measures:

Accepted Answer

Changes in prices paid by urban consumers for a basket of goods and services

Answer

Changes in wholesale goods prices paid by producers

Answer

The total output of goods and services in the economy

Answer

The rate of change in corporate earnings

Question 6

Which monetary policy tool does the Federal Reserve use most frequently to influence short-term interest rates?

Accepted Answer

Open market operations

Answer

Reserve requirement adjustments

Answer

Discount rate changes

Answer

Foreign exchange interventions

Question 7

A country running a current account deficit is best described as:

Accepted Answer

Spending more on foreign goods and services than it earns from exports

Answer

Exporting more goods than it imports

Answer

Having a budget surplus in its government finances

Answer

Holding more foreign currency reserves than liabilities