© 2000 John Petroff
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© 2000 John Petroff |
Questions for Chapter 15 Economic Analysis
Review questions:
Q-15.1
Explain difference in economic analysis between an investment
for retirement and an analysis of a client for open account privileges.
Q-15.2 Why doesn't a financial
analyst need to conduct much economic analysis him/herself?
Q-15.3 How accurate are
forecasts by economists?
Q-15A1.1
What is the range of annual economic growth rates experienced
over the past half century in the world?
Q-15A1.2 Have developing
countries grown faster at times than developed countries?
Q-15A1.3 Has the annual
rate of economic growth been rising in United States in the most
recent past (20 years)?
Q-15A1.4 What are the four
major econo-political reasons for economic growth?
Q-15A1.5 What prediction
can be made about future developments government attitude toward
international trade and avoidance of war?
Q-15A1.6 What is the major
social change that contributed to a growth of the labor force
over the past fifty years in developed countries?
Q-15A1.7 Can further increases
in women participation in the labor force be expected to continue
to rise?
Q-15A1.8 Has women participation
in the labor force exceeded men participation recently?
Q-15A1.915A1.9 What is
the major last determinant of labor force growth?
Q-15A1.10 Does Western
Europe have a higher rate of growth of population?
Q-15A1.11 What is the projected
rate of population growth in the United States?
Q-15A1.12 What proportion
of economic growth is attributable to productivity growth in the
United States?
Q-15A1.13 List the five
positive components of productivity growth.
Q-15A1.14 What negative
factor caused productivity growth to be reduced?
Q-15A1.15 Which of the
five positive components of productivity growth give the best
hope of continued improvement?
Q-15A1.16 How much more
gains are possible in improvement of skills due to education in
the United States?
Q-15A1.17 Can net capital
investment be expected to rise in the future in the United States?
Q-15A1.18 Are increases
in economies of scale possible for American firms? Why and how?
Q-15A1.19 What role is
the internet expected to play in future productivity gain?
Q-15A1.20 What has been
the average productivity gain over the past 20 years in the United
States?
Q-15A1.21 What is an conservative
prediction of annual growth rate for the United States?
Q-15A2.1
Why socio-economic trends need to be studied by an analyst?
Q-15A2.2 What is the most
important impact of socio-economic trend changes that bring about
changes in consumer needs and wants?
Q-15A2.3 How does an analyst
choose the socio-economic trends to investigate?
Q-15B.1
How can the business cycle be broken down beyond two phases (recession
and expansion)?
Q-15B.2 What differentiates
a business cycle from cycles in industries or regions?
Q-15B1.1
Has the severity of business cycles in the United States increased
in the recent past?
Q-15B1.2 What can be said
about the length of expansion phases recently compared to the
past?
Q-15B2.1
Describe major features of an overheating expansion phase.
Q-15B2.2 Describe the beginning
of an economic slow down after the peak.
Q-15B2.3 Describe the contraction
once the slow down becomes entrenched.
Q-15B2.4 Describe the recession
or depression that results from the contraction.
Q-15B2.5 Describe the recovery
after the trough.
Q-15B2.6 Describe the early
expansion once recovery is assured.
Q-15B2.7 Describe what
cause the expansion to eventually overheat.
Q-15B3.1
Can the severity of business cycles in the 19th century be attributed
to misguided government policies?
Q-15B3.2 Give examples
of policy errors in the 20th century.
Q-15B3.3 What are the two major policies that are used to control
business cycles?
Q-15B3.4 Have economist
believed that government policies worked so well that it was possible
to fine tune the economy?
Q-15B3.5 How is modern
fiscal policy known?
Q-15B3.6 Who is responsible
for improvements in monetary policy?
Q-15B4.1
Outline the price disequilibrium explanation of business cycles.
Q-15B4.2 Outline the exogenous
force explanation of business cycles.
Q-15B4.3 Outline the underconsumption
explanation of business cycles.
Q-15B4.4 Outline the overinvestment
explanation of business cycles.
Q-15B4.5 Outline the psychological
explanation of business cycles linked to innovations.
Q-15B4.6 Outline the forced
saving explanation of business cycles.
Q-15B4.7 Outline the acceleration
explanation of business cycles.
Q-15B4.8 Outline the multiplier
explanation of business cycles.
Q-15B4.9 Outline the explanation
of business cycles linked to overlending by banks.
Q-15B4.10 Outline the explanation
attributing business cycles responsibility to misguided monetary
policy.
Q-15B4.11 Why are there
so many different interpretation of the business cycle?
Q-15C.1
Is it dangerous to put great emphasis on recent economic patterns?
Give examples.
Q-15C.2 Is forecasting economic
behavior necessary in capital budgeting? Why?
Q-15C.3 Why is an economic
turning point so crucial for investment strategies?
Q-15C.4 Do financial analyst
have to construct complete economic forecasts by themselves?
Q-15C1.1
What is the name given to a forecast technique based on economic
relationships derived with regression analysis and projected into
next period?
Q-15C1.2 Give example of
well-known econometric models.
Q-15C1.3 How many equations
can an econometric model have?
Q-15C1.4 How are the values
of exogenous variables obtained?
Q-15C1.5 What is the name
given to variables that are explained by other variables?
Q-15C1.6 What is a key
requirement for an econometric model to be logical?
Q-15C2.1
What is the name of the forecasting tool that is made of a matrix
of coefficient representing the relationship of every economic
sector with ane another?
Q-15C2.2 How many sectors
are included in the input-output table of the US Department of
Commerce?
Q-15C2.3 Describe how an
input-output table is used to make forecasts. For instance, start
with a oil price increase.
Q-15C2.4 In which countries
were input-output tables ordinarily used as major forecasting
tools?
Q-15C3.1
What is the name given to a forecasting technique that focuses
on a spectral analysis of a variable over time?
Q-15C3.2 What are the three
types of regression used in a times-series analysis?
Q-15C3.3 What are the limitations
of time-series analysis?
Q-15C3.4 What are key variables
missing from times-series analysis?
Q-15C4.1
Why are judgmental forecasts appropriate in economic forecasts?
Q-15C4.2 Who are the individuals
that are considered as experts in the field of business cycles?
Q-15C4.3 Is using a large
number of experts preferable? What problems arise?
Q-15D4.4 How a probabilistic
distribution constructed in a judgmental forecast?
Q-15C4.5 How convergence
toward a consensus forecast is achieved?
Q-15C4.6 What is the name
of the technique that facilitates convergence to consensus forecast?
Q-15C4.7 Why makes judgmental
forecasts superior to econometric or time-series forecasts?
Q-15C5.1
What are the names of the three type of indicators published by
the US government since 1938?
Q-15C5.2 What is the purpose
of the leading indicator?
Q-15C5.3 List some of the
components of the composite leading indicator.
Q-15C5.4 What is the purpose
of the coincidental indicator?
Q-15C5.5 List some of the
components of the composite coincidental indicator.
Q-15C5.6 What is the purpose
of the lagging indicator?
Q-15C5.67 List some of
the components of the composite lagging indicator.
Q-15C5.8 Why is it difficult
to forecast with indicators?
Q-15C5.9 Can forecasts
beyond one year be made using indicators?
Q-15C5.10 What do indicators
predict best
Q-15C6.1
Are interest rates linked to the business cycle? Discuss.
Q-15C6.2 Has there been
a time when recession and inflation coincided in American economic
history?
Q-15C6.3 List the commonly
given explanations of inflation.
Q-15C5.4 What variables
are used in linking inflation to monetary conditions?
Q-15C6.5 How does demand
for investment affect interest rates? How does that change over
the business cycle?
Q-15C6.6 How does liquidity
preference affect interest rates? How does that change over the
business cycle?
Q-15C6.7 In which type of composite indicator is interest rate
present?
Q-15C6.8 Which forecasting
techniques are appropriate for interest rate forecasting?
Q-15C6.9 Which forecasting
techniques are inappropriate for interest rate forecasting?
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