Economic & Financial Flashcards
6 cards from real RIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Economic & Financial flashcards as text
Which economic indicator is considered a leading indicator of future economic activity?
Answer: Building permits issued
Building permits are a leading indicator because they signal future construction activity before it occurs.
The yield curve inverts when:
Answer: Short-term rates exceed long-term rates
An inverted yield curve occurs when short-term interest rates are higher than long-term rates, often signaling recession.
What does a P/E ratio measure?
Answer: Price relative to earnings
The Price-to-Earnings ratio measures how much investors pay for each dollar of earnings.
Stagflation is characterized by:
Answer: High inflation and high unemployment
Stagflation combines stagnant economic growth with high inflation and unemployment.
Which type of risk cannot be eliminated through diversification?
Answer: Systematic risk
Systematic risk (market risk) affects the entire market and cannot be diversified away.
The Federal Reserve's primary tool for implementing monetary policy is:
Answer: Open market operations
The Fed conducts open market operations—buying and selling Treasury securities—to influence money supply and interest rates.
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