In The United States Why Is There A Strong Relationship

Question: How accurately do GDP portray the economy and why?

Answer: Inaccurately because the scope of GDP measurements can change.

Question: Consider the formula GDP = C+I+G+(X-M). A country is undergoing a boom in consumption of domestic and foreign luxury goods. In one year, the dollar growth in imports is greater than the dollar growth in domestic consumption. Assuming nothing else has changed, what happened to GDP?

Answer: It went down

Question: C= Consumer spending

I = Investment (Gross Fixed Capital Formation)

G= Government Spending

X= Exports

M= Imports

Answer: what is the meaning of each letter in the GDP formula, C+I+G+(X-M).

Question: Here is the most important economic data for Australia and Sweden. which economy did better year-over-year (YOY) in the fourth quarter of 2013 compared to the fourth quarter of 2012? Use the two charts to investigate.

Answer: Sweden performed better

Question: In the United States, why is there a strong correlation between unemployment and GDP?

Answer: Consumer spending accounts for two-thirds of the U.S. economy when the number of unemployed consumers rises, there is less consumer spending.

Question: Here is a chart showing both nominal GDP growth and real GDP growth for a country. Which of the following can be a true statement at the time the chart was captured?

Answer: The country has deflation. The bottom line is nominal growth and the top line is real growth.

Question: Which of the following lines is the best leading economic indicator?

Answer: PMI

Question: What typically happens to nonfarm payrolls, the PMI indicator, and housing starts at the onset of a recession in the United States?

Answer: Nonfarm payrolls go down, the PMI indicator goes DOWN, the housing starts goes down.

Question: Which of the following qualities of economic indicators do investors prize the most?

Answer: Timeliness of release

Question: Why is the release of GDP statistics less interesting to investors than the release of other economic indicators?

Answer: Because GDP statistics are released well after other economic indicators.