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ECON435 > 17: Macroeconomic and Industry Analysis > Flashcards

17: Macroeconomic and Industry Analysis Flashcards

1
Q

Fundamental Analysis Definition

A

Research to predict stock values that focusses on…
- Earnings and dividend prospects
- Expectations for for future interest rates
- Risk evaluation of the firm

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2
Q

Exchange Rate Definition

A

The price of a unit of one country’s currency in terms of another country’s currency.

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3
Q

GDP Definition

A

The market value of goods and services produced over time.

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4
Q

Unemployment Rate Definition

A

The ratio of the number of people classified as unemployed to the total labour force.

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5
Q

Inflation Definition

A

The rate at which the general level of prices for goods and services is rising.

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6
Q

Budget Deficit Definition

A

The amount by which government spending exceeds government revenues.

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7
Q

Demand Shock Definition

A

An even that affects the demand for goods and services in the economy.

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8
Q

Supply Shock Definition

A

An event that affects the production capacity and costs in the economy.

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9
Q

Fiscal Policy Definition

A

The use of government spending and taxing for the purpose of stabilizing the economy.

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10
Q

Monetary Policy Definition

A

Actions taken by the central bank to influence the money supply and interest rates.

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11
Q

Business Cycle Definition

A

Repetitive periods of recession and recovery.

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12
Q

Peak Definition (Business Cycles)

A

Transition period from the end of an expansion to the start of a contraction.

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13
Q

Trough Definition (Business Cycles)

A

Transition period from the end of a contraction to the start of an expansion.

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14
Q

Cyclical Industries Definition

A

Industries with above-average sensitivity to the state of the economy.

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15
Q

Defensive Industries Definition

A

Industries with little sensitivity to the state of the economy.

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16
Q

Leading Economic Indicators Definition

A

Predictive factors that tend to rise or fall in advance of the rest of the economy.

17
Q

NAICS Codes Definition

A

North American Industrial Classification System
Codes that use numerical values to identify industries.

18
Q

Degree of Operating Leverage (DOL) Definition

A

% change in profits for a 1% change in sales.

19
Q

Sector Rotation Definition

A

An investment strategy that entails shifting the portfolio into an industry that is expected to outperform others based on macroeconomic factors.

20
Q

Industry Lifecycle Definition

A

Stages though which firms will typically pass as they mature.

21
Q

What is the aim of macroeconomic policy?

A

To maintain the economy near full employment and keep inflation at target.

22
Q

What are the two traditional types of macroeconomic policy?

A

Monetary policy and fiscal policy.

23
Q

What are the tools of fiscal policy?

A

Government spending and tax collection.

24
Q

What is the tool of monetary policy?

A

Influencing the money supply.

25
Q

What are the effects of expansionary fiscal policy?

A

Stimulating the economy and increasing GDP. Downside is it increases interest rates,

26
Q

How does expansionary monetary policy work?

A

By lowering interest rates.

27
Q

What types of industries are more sensitive to business cycles?

A

High-priced durable goods because consumers can time their purchases.

28
Q

What are examples of cyclical industries?

A

Jewelry, automobiles, capital equipment for firms.

29
Q

What 2 factors increase sensitivity to the business cycle?

A

Operating leverage and financial leverage.

30
Q

What are the 4 industry lifecycle stages?

A
  1. Start-up
  2. Consolidation
  3. Maturity
  4. Decline
31
Q

An industry with rapid growth and no obvious industry leaders would be in which stage of the lifecycle?

A

Start-up

32
Q

An industry that has an established product and emerging industry leaders would be in which stage of the lifecycle?

A

Consolidation

33
Q

An industry whose products has largely saturated the market and has growth similar to that of the economy as a whole would be in which stage of the lifecycle?

A

Maturity

34
Q

An industry that is facing competition from new products would be in which stage of the lifecycle?

A

Decline

ECON435 (5 decks)

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