Bloomberg Answers Economic Indicators The Primacy of GDP (30 min.) Knowledge Check 1 How accurately do GDP statistics portray the economy and why? Knowledge Check 2 Consider the formula GDP = C I (X-M). A country is undergoing a boom in consumption of domestic and foreign luxury goods. In one year,...
Bloomberg AnswersBloomberg Answers
Economic IndicatorsEconomic Indicators
The Primacy of GDP (30 min.)The Primacy of GDP (30 min.)
Knowledge Check 1Knowledge Check 1
How accurately do GDP statistics portray the economy an d why? How accurately do GDP statistics portray the economy an d why?
Inaccurately because the scope of GDP Inaccurately because the scope of GDP measurements can change.measurements can change.
Knowledge Check 2Knowledge Check 2
Consider the formula GDP = C + I + (X-Consider the formula GDP = C + I + (X- M). A country is undergoing a boom in consumpM). A country is undergoing a boom in consump tion oftion of
domestic and foreign luxury goods. In one year, the dollar domestic and foreign luxury goods. In one year, the dollar growth in imports is greater than thegrowth in imports is greater than the
dollar growth in domestic consumption. Assuming nothi ng else dollar growth in domestic consumption. Assuming nothi ng else has changed, what happened tohas changed, what happened to
GDP?GDP?
It went down.It went down.
Knowledge Check 3Knowledge Check 3
Here is the most Here is the most important economic data for Australia and Sweden. Whi ch economy did better important economic data for Australia and Sweden. Whi ch economy did better
year-over-year (YOY) in the fourth quarter of 2013 year-over-year (YOY) in the fourth quarter of 2013 compared to the fourth quarter of 2012?compared to the fourth quarter of 2012?
Use the two charts to investigate.Use the two charts to investigate.
Sweden performed better.Sweden performed better.
Knowledge Check 4Knowledge Check 4
In the US, why iIn the US, why i s there a strong correlation between unemployment an d GDP? s there a strong correlation between unemployment an d GDP?
Consumer spending accounts for two-thirds of the U.S. economy. When the number of Consumer spending accounts for two-thirds of the U.S. economy. When the number of
unemployed consumers rises, there is less consumer sp ending. unemployed consumers rises, there is less consumer sp ending.
SECTION QUIZSECTION QUIZ
1. 1.Here is a chart showing both nominal GDP growth and real GDP Here is a chart showing both nominal GDP growth and real GDP growth for a country.growth for a country.
Which of the following can be a true Which of the following can be a true statement at the time the chart was captured?statement at the time the chart was captured?
a.a.The country has deflation. The bottom line iThe country has deflation. The bottom line i s nominal growth and the top line s nominal growth and the top line is realis real
growth.growth.
2. 2.Which of the following lines is Which of the following lines is the best leading economic factor?the best leading economic factor?
a.a.PMIPMI
3. 3.The “misery index” is often The “misery index” is often cited in the media as a way to cited in the media as a way to measure consumer pain. It ismeasure consumer pain. It is
defined as the inflation rate plus the unemployment rate. Review and defined as the inflation rate plus the unemployment rate. Review and identify theidentify the
country with the highest “misery country with the highest “misery index.”index.”
a.a. Argentina Argentina
4. 4.What typically happens to nonfarm payrolls, What typically happens to nonfarm payrolls, the PMI indicator, and housing the PMI indicator, and housing starts at thestarts at the
onset of a recession in the onset of a recession in the United States?United States?
a.a.Nonfarm payrolls go DOWN, the PMI indicator goes DO WN, the Nonfarm payrolls go DOWN, the PMI indicator goes DO WN, the housing starts goeshousing starts goes
DOWN.DOWN. Monitoring GDP (10 min.)
SECTION QUIZ
1.Which of the following qualities of economic indicators do investors prize the most?
a.Timeliness of release.
2.Why is the release of GDP statistics less interesting to investors than th e release of ot her
economic indicators?
a.Because GDP statistics are released well after other economic indicators.
3.Which of the following important U.S. economic indicato rs is only available on a
quarterly basis?
a.GDP
4.Which economic indicator is most directly linked to unem ployment?
a.Nonfarm payrolls.
Forecasting GDP (20 min.)
Knowledge Check 1
Here is the economic calendar for the UK for August 2013. Examine indicators like PMI, house
prices, industrial production, employment, retail sal es, and GDP. Based on these major
indicators, how did the UK economy perform overall?
Above Expectations
Knowledge Check 2
This chart was captured in mid-2014. At that point in time, which of the following terms would
have described the growth in the Chinese economy pred icted in this pop -out table?
Deceleration
Knowledge Check 3
How have economic forecasts for this economy evolved?
Minimal Change
SECTION QUIZ
1.These charts show data for four countries as of early 2016. For each country, the purple
line denotes historic real GDP growth. The white line denotes the consensus estimated
real GDP growth. The red line denotes the most pessimistic analyst forecast. The gr een
line denotes the most optimistic analyst forecast. F or which country is there the most
controversy among the analyst community about 2016 growth?
a.RUSSIA
2.What is the main reason that investment banks create estimates of economic
indicators?
a.To know when specific economic data points are a po sitive or negative surprise.
3.Which of the following is the biggest pitfall of economic indicators?
a.They do not consistently presage turning points.
4.Here is a chart displaying estimates of the initial jobless claims indicator, one of the
main unemployment statistics in the U.S. It measures the number of new applicants for
unemployment benefits. What was the level of the an alyst with the most optimistic
outlook?
a.260
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Succeed. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $19.39. You're not tied to anything after your purchase.
