Macroeconomics

Question 1

What is the Balance of Payments?

Answer 1

A country’s total exports of goods and services minus its imports of goods and services.

Another term for Balance of Trade.

Question 2

What is the Bank of Canada?

Answer 2

Canada’s central bank.

Question 3

What is a Bubble in economics?

Answer 3

An economic cycle characterized by the rapid escalation of market value, particularly in the price of assets, that can’t be sustained.

Question 4

What is the Business Cycle?

Answer 4

The cycle of fluctuations between periods of expansion and contraction within an economy.

Question 5

What does CDO stand for?

Answer 5

Collateralized Debt Obligation.

Question 6

What is a Central Bank?

Answer 6

A bank that provides financial and banking services for its country’s government and commercial banking system, as well as implementing the government’s monetary policy and issue of currency.

Question 7

What does CFTC stand for?

Answer 7

Commodity Futures Trading Commission (CFTC - attempts to regulate derivatives).

Question 8

What is the Consumer Price Index (CPI)?

Answer 8

A national measurement of the overall change in consumer prices based on a representative shopping basket of goods and services over time (usually one year).

Question 9

What are Credit Default Swaps?

Answer 9

A financial derivative that allows an investor to swap or offset their credit risk with that of another investor. It’s like insurance policies for CDOs.

Question 10

What are Credit Ratings?

Answer 10

Rating given to investments indicating how safe they are.

AAA is the best.

Question 11

What is Currency?

Answer 11

The tangible form of money that is paper bills and coins used as a medium of exchange.

Question 12

What does Default mean?

Answer 12

Not being able to pay a mortgage, loan or other obligation.

Question 13

What is Demand?

Answer 13

The consumers’ willingness and ability to pay a certain price for a product or service at a given period.

Question 14

What is Deregulation?

Answer 14

Having no oversight of market activity from a government agency.

Question 15

What are Derivatives?

Answer 15

A type of financial contract whose value is dependent on an underlying asset. These types of investments tend to be riskier than others.

Question 16

What is an Exchange Rate?

Answer 16

The price at which one currency can be converted into another.

Question 17

What is the Federal Reserve?

Answer 17

Central bank of the United States.

Question 18

What is Fiscal Policy?

Answer 18

The use of government spending and tax policies to influence economic conditions in an economy.

Question 19

What is Foreclosure?

Answer 19

Occurs when a bank takes over a property whose former owners are unable to make mortgage payments.

Question 20

What does GNP stand for?

Answer 20

Gross National Product which is a country’s Gross Domestic Product plus the income earned by residents from investments abroad, less the corresponding income sent home by foreigners who are living in the country.

Question 21

What is GNP per Capita?

Answer 21

GNP expressed on a per person basis.

Question 22

What is Inflation?

Answer 22

A persistent rise over time in the average price of goods and services.

Question 23

What is the Inflation Rate?

Answer 23

Inflation calculated over a defined period, usually measured on an annual basis, expressed as a percentage.

Question 24

What does Insolvent mean?

Answer 24

Unable to pay debts owed.

Question 25

What is an Investment Bank?

Answer 25

A bank that provides financial services for corporate and institutional customers, but not consumers.

Question 26

What is Leverage?

Answer 26

Debt, usually expressed as a ratio compared to the equity of a company.

Question 27

What is a Luddite?

Answer 27

A person opposed to new technology or ways of working.

Question 28

What is Macroeconomics?

Answer 28

Study of the entire economy from a national perspective.

Question 29

What is Monetary Policy?

Answer 29

A set of tools used by a nation's central bank to control the overall money supply and the manipulation of interest rates to promote economic growth.

Question 30

What are Money Market Funds?

Answer 30

A type of mutual fund that invests in high-quality, short-term debt instruments, cash, and cash equivalents.

Question 31

What is Money Supply?

Answer 31

The amount of currency available in an economy.

Question 32

What does OTC stand for?

Answer 32

Over The Counter.

Question 33

What does OSC stand for?

Answer 33

Ontario Securities Commission (regulates stock market activity in Ontario).

Question 34

What does Per Capita mean?

Answer 34

Per person. This is used to express financial metrics on a per person basis.

Question 35

What is a Ponzi Scheme?

Answer 35

A form of fraud in which belief in the success of a nonexistent enterprise or investment fund, is fostered by the payment of quick returns to the first investors from money invested by later investors.

Question 36

What is Predatory Lending?

Answer 36

Imposing unfair, deceptive, or abusive loan terms on borrowers.

Question 37

What is the Prime Lending Rate?

Answer 37

The interest rate that commercial banks charge creditworthy customers.

Question 38

What is a Recession?

Answer 38

A period of economic decline in which trade and industrial activity are reduced, generally identified by a decline in GDP in two successive quarters.

Question 39

What is the S&P 500?

Answer 39

Standard & Poors index of the 500 largest companies listed on stock exchanges in the US.

Question 40

What does SEC stand for?

Answer 40

Securities Exchange Commission - stock market regulators in the US.

Question 41

What is the Securitization Food Chain?

Answer 41

The chain of loan payments for mortgages in the United States.

Question 42

What are Sub-Prime Mortgages?

Answer 42

Loans or mortgages sold below the prime lending rate.

Question 43

What is Supply?

Answer 43

The total amount of a specific good or service that is available to consumers.