1、Chapter 17 - Macroeconomic and Industry Analysis17-1Chapter17Macroeconomic and industry Analysis1. A top down analysis of a firm starts with _. D. the global economy2. An example of a highly cyclical industry is _. A. the automobile industry3. Demand-side economics is concerned with _. A. government
2、 spending and tax levelsB. monetary policyC. fiscal policyE. A, B, and C4. The most widely used monetary tool is _. C. open market operations5. The “real“, or inflation-adjusted, exchange rate, is C. the purchasing power ratio.6. The “normal“ range of price-earnings ratios for the S ample17. A decli
3、ning GDP indicates a(n) _ economy with _ opportunity for a firm to increase sales. A. stagnant; little18. The average duration of unemployment and changes in the consumer price index for services are _. C. lagging economic indicators19. A firm in an industry that is very sensitive to the business cy
4、cle will likely have a stock beta _. A. greater than 1.020. If the economy were going into a recession, an attractive industry to invest in would be the _ industry. B. medical services21. The stock price index and contracts and new orders for nondefense capital goods are A. leading economic indicato
5、rs.22. A firm in the early stages of the industry life cycle will likely have _. B. high risk.C. rapid growthE. B and CChapter 17 - Macroeconomic and Industry Analysis17-323. Assume the U.S. government was to decide to increase the budget deficit. This action will most likely cause _ to increase A.
6、interest ratesB. government borrowingD. both A and B24. Assume the U.S. government was to decide to decrease the budget deficit. This action will most likely cause _ to decrease A. interest ratesB. government borrowingD. both A and B25. Assume that the Federal Reserve decreases the money supply. Thi
7、s action will cause _ to decrease. C. investment in the economy26. If the currency of your country is depreciating, the result should be to _ exports and to _ imports. B. stimulate, discourage27. If the currency of your country is appreciating, the result should be to _ exports and to _ imports. C.
8、discourage, stimulate28. Increases in the money supply will cause demand for investment and consumption goods to _ in the short run and cause prices to _ in the long run. A. increase, increase29. The North American Industry Classification System (NAICS) A. are for firms that operate in the NAFTA reg
9、ion.B. group firms by industry.D. A and B.30. If interest rates increase, business investment expenditures are likely to _ and consumer durable expenditures are likely to _. D. decrease, decrease31. Fiscal policy generally has a _ direct impact than monetary policy on the economy, and the formulatio
10、n and implementation of fiscal policy is _ than that of monetary policy. B. more, slowerChapter 17 - Macroeconomic and Industry Analysis17-432. Fiscal policy is difficult to implement quickly because A. it requires political negotiations.B. much of government spending is nondiscretionary and cannot
11、be changed.D. A and B.33. Inflation A. is the rate at which the general level of prices is increasing.B. rates are high when the economy is considered to be “overheated“.D. A and B.Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and
12、 variable costs of 50 cents per widget. Firm B has total fixed costs of $240,000 and variable costs of 75 cents per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.34. If
13、the economy enters a recession, the after-tax profit of Firm A will be _. C. $30,00035. If the economy enters a recession, the after-tax profit of Firm B will be _. E. none of the above36. If the economy is strong, the after-tax profit of Firm A will be _. D. $60,00037. If the economy is strong, the
14、 after-tax profit of Firm B will be _. C. $36,00038. Calculate firm As degree of operating leverage. A. 11.039. Calculate firm Bs degree of operating leverage. C. 29.8640. Classifying firms into groups, such as _ provides an alternative to the industry life cycle. A. slow-growersB. stalwartsD. A and
15、 B41. Supply-side economists wishing to stimulate the economy are most likely to recommend D. a decrease in the tax rate.Chapter 17 - Macroeconomic and Industry Analysis17-542. Which of the following are not examples of defensive industries? B. durable goods producers.43. Which of the following are
16、examples of defensive industries? A. food producers.C. pharmaceutical firms.D. public utilitiesE. A, C and D44. _ is a proposition that a strong proponent of supply side economics would most likely stress. B. Higher marginal tax rates promote economic inefficiency and thereby retard aggregate output
17、 as they encourage investors to undertake low productivity projects with substantial tax shelter benefits45. The industry life cycle is described by which of the following stage(s)? A. start-up.B. consolidation.D. A and B.46. In the start-up stage of the industry life cycle A. it is difficult to pre
18、dict which firms will succeed and which firms will fail.B. industry growth is very rapid.D. A and B.47. In the consolidation stage of the industry life-cycle C. the performance of firms will more closely track the performance of the overall industry.48. In the maturity stage of the industry life cyc
19、le A. the product has reached full potential.B. profit margins are narrower.C. producers are forced to compete on price to a greater extent.E. A, B, and C.49. In the decline stage of the industry life cycle A. the product may have reached obsolescence.B. the industry will grow at a rate less than th
20、e overall economy.C. the industry may experience negative growth.E. A, B, and C.Chapter 17 - Macroeconomic and Industry Analysis17-650. A variety of factors relating to industry structure affect the performance of the firm, including A. threat of entry.B. rivalry between existing competitors.E. A an
21、d B.51. The process of estimating the dividends and earnings that can be expected from the firm based on determinants of value is called D. fundamental analysis.52. The emerging market exhibiting the highest growth in real GDP in 2007 was A. China53. The emerging stock market exhibiting the highest
22、U.S. dollar return in 2007 was A. China54. The life cycle stage in which industry leaders are likely to emerge is the C. consolidation stage.55. Investment manager Peter Lynch refers to firms that are in bankruptcy or soon might be as E. turnarounds.56. A top-down analysis of a firms prospects start
23、s with D. an assessment of the broad economic environment.57. Over the period 1999-2006, which of the following countries had a change in its real exchange rate that was favorable for U.S. consumers who want to buy its goods? E. Japan58. Over the period 1999-2006, which of the following countries ha
24、d a change in its real exchange rate that was most unfavorable for U.S. consumers who want to buy its goods? A. Canada59. In recent years, P/E multiples have B. risen dramatically.60. In recent years, P/E multiples for S industry-specific iShares66. Which of the following are key economic statistics
25、 that are used to describe the state of the macroeconomy? I) gross domestic productII) the unemployment rateIII) inflationIV) consumer sentimentV) the budget deficit E. I, II, III, IV, and V67. An example of a positive demand shock is E. a decrease in tax rates.68. An example of a negative demand sh
26、ock is A. a decrease in the money supply.B. a decrease in government spending.E. A and B.69. During which stage of the industry life cycle would a firm experience stable growth in sales? A. Consolidation70. The emerging stock market exhibiting the highest local currency return in 2007 was B. ChinaE.
27、 China71. Sector rotation C. is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future.Chapter 17 - Macroeconomic and Industry Analysis17-872. According to Michael Porter, there are five determinants of competition. An example of _ is when new
28、 entrants to an industry our pressure on prices and profits. A. Threat of Entry 73. According to Michael Porter, there are five determinants of competition. An example of _ is when competitors seek to expand their share of the market. B. Rivalry between Existing Competitors74. According to Michael P
29、orter, there are five determinants of competition. An example of _ is when the availability limits the prices that can be charged to customers. C. Pressure from Substitute Products75. According to Michael Porter, there are five determinants of competition. An example of _ is when a buyer purchases a
30、 large fraction of an industrys output and can demand price concessions. D. Bargaining power of Buyers76. Assume the U.S. government was to decide to increase the budget deficit. This action will most likely cause _ to increase A. interest ratesB. government borrowingD. both A and B77. If interest r
31、ates decrease, business investment expenditures are likely to _ and consumer durable expenditures are likely to _. A. increase, increase78. An example of a defensive industry is _. B. the tobacco industryC. the food industryE. B and C Two firms, C and D, both produce coat hangers. The price of coat
32、hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30 cents per widget. Firm D has total fixed costs of $400,000 and variable costs of 50 cents per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 widgets. If the econom
33、y enters a recession, each firm will sell 1,400,000 widgets. 79. If the economy enters a recession, the total revenue of Firm C will be _. A. $1,680,00080. If the economy enters a recession, the total cost of Firm C will be _. B. $1,170,000Chapter 17 - Macroeconomic and Industry Analysis17-981. If t
34、he economy enters a recession, the before tax profit of Firm C will be _. C. $510,00082. If the economy enters a recession, the tax of Firm C will be _. D. $204,00083. If the economy enters a recession, the after tax profit of Firm C will be _. E. $306,00084. If the economy is strong, the total reve
35、nue of Firm C will be _. D. $2,400,00085. If the economy is strong, the total cost of Firm C will be _. C. $1,305,00086. If the economy is strong, the before tax profit of Firm C will be _. B. $1,050,00087. If the economy is strong, the tax of Firm C will be _. A. $420,00088. If the economy is stron
36、g, the after-tax profit of Firm C will be _. E. $630,00089. If a firms sales decrease by 15% and profits decrease by 20% during a recession, the firms operating leverage is _? A. 1.33Chapter 17 - Macroeconomic and Industry Analysis17-10Short Answer Questions90. Discuss the tools of the U.S. governme
37、nts “demand-side“ policy. Include in your discussion of these tools the relative advantages and disadvantages of each in terms of the effect of the use of these tools on the economy. The two tools of the governments “demand-side“ policy are fiscal and monetary policy. Fiscal policy is the use of gov
38、ernment spending and taxing for the specific purpose of stabilizing the economy. Fiscal policy, once enacted, has the most direct and immediate effect on the economy. However, the formulation and implementation of fiscal policy is extremely slow, as such policy must be approved by both the legislati
39、ve and executive branches of the federal government. Monetary policy consists of actions taken by the Board of Governors of the Federal Reserve System (FRS) to influence the money supply and/or interest rates. Monetary policy is relatively easy to formulate and to implement, but has less direct impa
40、ct on the economy than fiscal policy. The most widely used tool of the FRS is the open market operations, in which the Fed buys or sells bonds for the Feds account. Buying securities increases the money supply; selling securities decreases the money supply. Open market operations occur daily. Other
41、FRS tools include adjusting the discount rate, which is the interest rate the Fed charges banks on short-term loans, and altering reserve requirements, which are the fraction of deposits that banks must maintain in cash deposits with the Fed. Reductions in the money supply signal an expansionary mon
42、etary policy; lowering reserve requirements increase the money supply, and thus, stimulate the economy. The Fed walks a fine line: expansionary monetary policy probably will lower interest rates and stimulate investment and consumption in the short run, but ultimately inflation probably will result.Feedback: The rationale of this question is to ascertain whether the student has an understanding of the basic principles of macroeconomics.
