Ch17 Test Bank Answers Macroeconomic and Industry Analysis

Student name:__________

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.
1) A top-down analysis of a firm starts with

A) the relative value of the firm.
B) the absolute value of the firm.
C) the domestic economy.
D) the global economy.
E) the industry outlook.

2) An example of a highly cyclical industry is

A) the automobile industry.
B) the tobacco industry.
C) the food industry.
D) the automobile industry and the tobacco industry.
E) the tobacco industry and the food industry.

3) Demand-side economics is concerned with

A) government spending and tax levels.
B) monetary policy.
C) fiscal policy.
D) None of the above.
E) All of the options are correct.

4) The most widely used monetary tool is

A) altering the discount rate.
B) altering the reserve requirements.
C) open-market operations.
D) altering marginal tax rates.
E) None of the options are correct.

5) The "real," or inflation-adjusted, exchange rate is

A) the balance of trade.
B) the budget deficit.
C) the purchasing-power ratio.
D) unimportant to the U.S. economy.
E) None of the options are correct.

6) The "normal" range of price-earnings ratios for the S&P 500 Index is

A) between 2 and 10.
B) between 5 and 15.
C) less than 8.
D) between 12 and 25.
E) greater than 20.

7) Monetary policy is determined by

A) government budget decisions.
B) presidential mandates.
C) the Board of Governors of the Federal Reserve System.
D) congressional actions.
E) None of the options are correct.

8) A trough is

A) a transition from an expansion in the business cycle to the start of a contraction.
B) a transition from a contraction in the business cycle to the start of an expansion.
C) a depression that lasts more than three years.
D) only something used by farmers to feed pigs and not an investment term.

9) A peak is

A) a transition from an expansion in the business cycle to the start of a contraction.
B) a transition from a contraction in the business cycle to the start of an expansion.
C) a depression that lasts more than three years.
D) only a feature of geography and not an investment term.
E) None of the options are correct.

10) If the economy is growing, firms with high operating leverage will experience

A) higher increases in profits than firms with low operating leverage.
B) similar increases in profits as firms with low operating leverage.
C) smaller increases in profits than firms with low operating leverage.
D) no change in profits.
E) None of the options are correct.

11) If the economy is shrinking, firms with high operating leverage will experience

A) larger decreases in profits than firms with low operating leverage.
B) similar decreases in profits as firms with low operating leverage.
C) smaller decreases in profits than firms with low operating leverage.
D) no change in profits.

12) If the economy is growing, firms with low operating leverage will experience

A) higher increases in profits than firms with high operating leverage.
B) similar increases in profits as firms with high operating leverage.
C) smaller increases in profits than firms with high operating leverage.
D) no change in profits.

13) If the economy is shrinking, firms with low operating leverage will experience

A) larger decreases in profits than firms with high operating leverage.
B) similar decreases in profits as firms with high operating leverage.
C) smaller decreases in profits than firms with high operating leverage.
D) no change in profits.

14) Industrial production refers to

A) the amount of personal disposable income in the economy.
B) the difference between government spending and government revenues.
C) the total manufacturing output in the economy.
D) the total production of goods and services in the economy.

15) GDP refers to

A) the amount of personal disposable income in the economy.
B) the difference between government spending and government revenues.
C) the total manufacturing output in the economy.
D) the total production of goods and services in the economy.
E) None of the options are correct.

16) A rapidly growing GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales.

A) stagnant; little
B) stagnant; ample
C) expanding; little
D) expanding; ample
E) stable; no

17) A declining GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales.

A) stagnant or shrinking; little
B) stagnant or shrinking; ample
C) expanding; little
D) expanding; ample
E) stable; no

18) The average duration of unemployment and changes in the consumer price index for services are

A) leading economic indicators.
B) coincidental economic indicators.
C) lagging economic indicators.
D) composite economic indicators.

19) A firm in an industry that is very sensitive to the business cycle will likely have a stock beta

A) greater than 1.0.
B) equal to 1.0.
C) less than 1.0 but greater than 0.0.
D) equal to or less than 0.0.
E) There is no relationship between beta and sensitivity to the business cycle.

20) If the economy were going into a recession, an attractive industry to invest in would be the

A) automobile industry.
B) medical services industry.
C) construction industry.
D) automobile and construction industries.
E) medical services and construction industries.

21) The stock price index and new orders for nondefense capital goods are

A) leading economic indicators.
B) coincidental economic indicators.
C) lagging economic indicators.
D) not useful as economic indicators.

22) A firm in the early stages of the industry life cycle will likely have

A) high market penetration.
B) high risk.
C) rapid growth.
D) high market penetration and rapid growth.
E) high risk and rapid growth.

23) Assume the U.S. government was to decide to increase the budget deficit. Holding all else constant, this will cause ______ to decrease.

A) interest rates
B) government borrowing
C) unemployment
D) interest rates and government borrowing
E) None of the options are correct.

24) Assume the U.S. government was to decide to decrease the budget deficit. Holding all else constant, this will cause ______ to decrease.

A) interest rates
B) government borrowing
C) unemployment
D) interest rates and government borrowing
E) None of the options are correct.

25) Assume that the Federal Reserve decreases the money supply. This action will cause ________ to decrease.

A) interest rates
B) the unemployment rate
C) investment in the economy
D) trade balance

26) If the currency of your country is depreciating, the result should be to ______ exports and to _______ imports.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) not affect; not affect

27) If the currency of your country is appreciating, the result should be to ______ exports and to _______ imports.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) not affect; not affect

28) Increases in the money supply will cause demand for investment and consumption goods to _______ in the short run and cause prices to ________ in the long run.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; hold steady
E) be unaffected; be unaffected

29) The North American Industry Classification System (NAICS) codes

A) are for firms that operate in the NAFTA region.
B) group firms by industry.
C) are a perfect classification system for firms.
D) are for firms that operate in the NAFTA region and group firms by industry.
E) are for firms that operate in the NAFTA region and are a perfect classification system for firms.

30) If interest rates increase, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) be unaffected; be unaffected

31) Fiscal policy generally has a _______ direct impact than monetary policy on the economy, and the formulation and implementation of fiscal policy is ______ than that of monetary policy.

A) more; quicker
B) more; slower
C) less; quicker
D) less; slower
E) Cannot tell from the information given

32) Fiscal policy is difficult to implement quickly because

A) it requires political negotiations.
B) much of government spending is nondiscretionary and cannot be changed.
C) increases in tax rates affect consumer spending gradually.
D) it requires political negotiations, and much of government spending is nondiscretionary and cannot be changed.
E) it requires political negotiations, and increases in tax rates affect consumer spending gradually.

33) Inflation

A) is the rate at which the general level of prices is increasing.
B) rates are high when the economy is considered to be "overheated."
C) is unrelated to unemployment rates.
D) is the rate at which the general level of prices is increasing, and rates are high when the economy is considered to be "overheated."
E) is the rate at which the general level of prices is increasing and is unrelated to unemployment rates.

34) Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.

If the economy enters a recession, the after-tax profit of Firm A will be

A) $0.
B) $6,000.
C) $30,000.
D) $60,000.
E) None of the options are correct.

35) Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.

If the economy enters a recession, the after-tax profit of Firm B will be

A) $0.
B) $6,000.
C) $36,000.
D) $60,000.
E) None of the options are correct.

36) Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.

If the economy is strong, the after-tax profit of Firm A will be

A) $0.
B) $6,000.
C) $36,000.
D) $60,000.

37) Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.

If the economy is strong, the after-tax profit of Firm B will be

A) $0.
B) $6,000.
C) $36,000.
D) $60,000.

38) Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.

Calculate firm A's degree of operating leverage.

A) 11.0
B) 2.86
C) 9.09
D) 1.00

39) Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.

Calculate firm B's degree of operating leverage.

A) .714
B) 9.09
C) 7.86
D) 7.14

40) Classifying firms into groups, such as _________, provides an alternative to the industry life cycle.

A) slow-growers
B) stalwarts
C) countercyclicals
D) slow-growers and stalwarts
E) slow-growers and countercyclicals

41) Supply-side economists wishing to stimulate the economy are most likely to recommend

A) a decrease in the money supply.
B) a decrease in production output.
C) an increase in the real interest rate.
D) a decrease in the tax rate.
E) an increase in mortgage rates.

42) Which of the following are not examples of defensive industries?

A) Food producers
B) Durable goods producers
C) Pharmaceutical firms
D) Public utilities

43) Which of the following are examples of defensive industries?

A) Food producers
B) Durable goods producers
C) Pharmaceutical firms
D) Public utilities
E) Food producers, pharmaceutical firms, and public utilities

44) ________ is a proposition that a strong proponent of supply-side economics would most likely stress.

A) Higher marginal tax rates will lead to a reduction in the size of the budget deficit and lower interest rates as they depend on government revenues
B) Higher marginal tax rates promote economic inefficiency and thereby retard aggregate output as they encourage investors to undertake low productivity projects with substantial tax shelter benefits
C) Income redistribution payments will exert little impact on real aggregate supply as they do not consume resources directly
D) A tax reduction will increase the disposable income of households, and thus, the primary impact of a tax reduction on aggregate supply will stem from the influence of the tax change on the size of the budget deficit or surplus
E) None of the options is a likely statement for a supply-side proponent.

45) The industry life cycle is described by which of the following stage(s)?

A) Start-up
B) Consolidation
C) Absolute decline
D) Start-up and consolidation
E) All of the options are correct.

46) In the start-up stage of the industry life cycle,

A) it is difficult to predict which firms will succeed and which firms will fail.
B) industry growth is very rapid.
C) firms pay a high level of dividends.
D) it is difficult to predict which firms will succeed and which firms will fail, and industry growth is very rapid.
E) industry growth is very rapid, and firms pay a high level of dividends.

47) In the consolidation stage of the industry life cycle,

A) it is difficult to predict which firms will succeed and which firms will fail.
B) industry growth is very rapid.
C) the performance of firms will more closely track the performance of the overall industry.
D) it is difficult to predict which firms will succeed and which firms will fail, and industry growth is very rapid.
E) industry growth is very rapid, and the performance of firms will more closely track the performance of the overall industry.

48) In the maturity stage of the industry life cycle,

A) the product has reached full potential.
B) profit margins are narrower.
C) producers are forced to compete on price to a greater extent.
D) the product has reached full potential and profit margins are narrower.
E) the product has reached full potential, profit margins are narrower, and producers are forced to compete on price to a greater extent.

49) In the decline stage of the industry life cycle,

A) the product may have reached obsolescence.
B) the industry will grow at a rate less than the overall economy.
C) the industry may experience negative growth.
D) the product may have reached obsolescence, and the industry will grow at a rate less than the overall economy.
E) the product may have reached obsolescence, the industry will grow at a rate less than the overall economy, and the industry may experience negative growth.

50) A variety of factors relating to industry structure affect the performance of the firm, including

A) threat of entry.
B) rivalry between existing competitors.
C) the state of the economy.
D) threat of entry and the state of the economy.
E) threat of entry and rivalry between existing competitors.

51) The process of estimating the dividends and earnings that can be expected from the firm based on determinants of value is called

A) business-cycle forecasting.
B) macroeconomic forecasting.
C) technical analysis.
D) fundamental analysis.
E) None of the options are correct.

52) The stock market exhibiting the highest U.S. dollar return in 2018 was

A) Brazil.
B) Singapore.
C) Greece.
D) South Korea.
E) China.

53) The life cycle stage in which industry leaders are likely to emerge is the

A) start-up stage.
B) maturity stage.
C) consolidation stage.
D) relative decline stage.
E) All of the options are correct.

54) Investment manager Peter Lynch refers to firms that are in bankruptcy or soon might be as

A) slow growers.
B) stalwarts.
C) cyclicals.
D) asset plays.
E) turnarounds.

55) A top-down analysis of a firm's prospects starts with

A) an examination of the firm's industry.
B) an evaluation of the firm's position within its industry.
C) a forecast of interest-rate movements.
D) an assessment of the broad economic environment.
E) the application of the CAPM to find the firm's theoretical return.

56) In 2009 the P/E multiples of the S&P 500 companies was approximately

A) 8
B) 12
C) 19
D) 25
E) 35

57) The industry with the highest ROE in 2018 was

A) grocery and food.
B) trucking.
C) business software.
D) computer systems.
E) integrated oil and gas.

58) The industry with the lowest ROE in 2018 was

A) money center banks.
B) chemical products.
C) business software.
D) biotech.
E) tobacco.

59) The industry with the lowest return in 2018 was

A) construction.
B) telecom services.
C) health care.
D) business software.
E) money center banks.

60) The industry with the highest return in 2018 was

A) trucking.
B) software applications
C) health plans.
D) asset management.
E) money center banks.

61) Investors can ______ invest in an industry with the highest expected return by purchasing ______.

A) most easily; industry-specific iShares
B) not; industry-specific iShares
C) most easily; industry-specific ADRs
D) not; individual stocks
E) None of the options are correct.

62) Which of the following are key economic statistics that are used to describe the state of the macroeconomy?I) Gross domestic productII) The unemployment rateIII) InflationIV) Consumer sentimentV) The budget deficit

A) I, II, and V
B) I, III, and V
C) I, II, and III
D) I, II, III, and V
E) I, II, III, IV, and V

63) An example of a positive demand shock is

A) a decrease in the money supply.
B) a decrease in government spending.
C) a decrease in foreign export demand.
D) a decrease in the price of imported oil.
E) a decrease in tax rates.

64) An example of a negative demand shock is

A) a decrease in the money supply.
B) a decrease in government spending.
C) an increase in foreign export demand.
D) a decrease in the price of imported oil.
E) a decrease in the money supply and a decrease in government spending.

65) During which stage of the industry life cycle would a firm experience stable growth in sales?

A) Consolidation
B) Relative decline
C) Maturity
D) Start-up
E) Stabilization

66) The stock market exhibiting the highest local currency return in 2018 was

A) Russia
B) China.
C) Singapore.
D) Mexico.
E) Brazil.

67) Sector rotation

A) should always be carried out.
B) is never worthwhile.
C) is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future.
D) can be implemented without cost.

68) According to Michael Porter, there are five determinants of competition. An example of _____ is the threat new competitors pose to existing competitors in an industry.

A) threat of entry
B) rivalry between existing competitors
C) pressure from substitute products
D) bargaining power of buyers
E) bargaining power of suppliers

69) According to Michael Porter, there are five determinants of competition. An example of _____ is when competitors seek to expand their share of the market.

A) threat of entry
B) rivalry between existing competitors
C) pressure from substitute products
D) bargaining power of buyers
E) bargaining power of suppliers

70) According to Michael Porter, there are five determinants of competition. An example of _____ is when the availability limits the prices that can be charged to customers.

A) threat of entry
B) rivalry between existing competitors
C) pressure from substitute products
D) bargaining power of buyers
E) bargaining power of suppliers

71) According to Michael Porter, there are five determinants of competition. An example of _____ is when a buyer purchases a large fraction of an industry's output and can demand price concessions.

A) threat of entry
B) rivalry between existing competitors
C) pressure from substitute products
D) bargaining power of buyers
E) bargaining power of suppliers

72) Assume the U.S. government was to decide to increase the budget field. Holding all else constant, this will cause ______ to increase.

A) interest rates
B) government borrowing
C) unemployment
D) interest rates and government borrowing
E) None of the options are correct.

73) If interest rates decrease, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) be unaffected; be unaffected

74) An example of a defensive industry is

A) the automobile industry.
B) the airline industry.
C) the food industry.
D) the automobile industry and the tobacco industry.
E) the airline industry and the food industry.

75) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy enters a recession, the total revenue of firm C will be

A) $1,680,000.
B) $1,400,000.
C) $2,000,000.
D) $0.
E) None of the options are correct.

76) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy enters a recession, the total cost of firm C will be

A) $1,680,000.
B) $1,170,000.
C) $750,000.
D) $420,000.

77) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy enters a recession, the before-tax profit of firm C will be

A) $1,680,000.
B) $1,170,000.
C) $510,000.
D) $204,000.

78) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy enters a recession, the tax of firm C will be

A) $1,680,000.
B) $750,000.
C) $510,000.
D) $204,000.

79) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy enters a recession, the after-tax profit of firm C will be

A) $1,680,000.
B) $750,000.
C) $510,000.
D) $204,000.
E) $306,000.

80) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy is strong, the total revenue of firm C will be

A) $1,680,000.
B) $1,400,000.
C) $2,000,000.
D) $2,400,000.

81) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy is strong, the total cost of firm C will be

A) $1,680,000.
B) $1,170,000.
C) $1,350,000.
D) $420,000.

82) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy is strong, the before-tax profit of firm C will be

A) $1,680,000.
B) $1,050,000.
C) $510,000.
D) $204,000.

83) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy is strong, the tax of firm C will be

A) $420,000.
B) $750,000.
C) $510,000.
D) $204,000.

84) Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.

If the economy is strong, the after-tax profit of firm C will be

A) $0.
B) $6,000.
C) $36,000.
D) $60,000.
E) $630,000.

85) If a firm's sales decrease by 15%, and profits decrease by 20% during a recession, the firm's operating leverage is

A) 1.33.
B) 0.75.
C) 5.
D) −5.

86) Markets reacted positively to the United States Mexico Canada Agreement (USMCA) as a replacement for NAFTA. If the agreement failed to be ratified by congress, the resulting negative economic impact would be an example of __________.

A) political risk.
B) interest rate risk.
C) volatility.
D) currency risk.

87) Profits made by Canadian investors in Russia, become negative when repatriated to Canada. This is an example of ________.

A) political risk.
B) interest rate risk.
C) volatility.
D) curency risk.

88) Japan announces a tariff on rice imported from China. In doing so, the resulting impact on consumers is similar to that of ___________.

A) budget deficits.
B) unemployment.
C) deflation.
D) tax increases.

89) Unemployment declines dramatically. This is a ___________________.

A) leading economic indicators.
B) coincidental economic indicators.
C) lagging economic indicators.
D) not useful as economic indicators.

90) Industrial production increases. This is a ___________________.

A) leading economic indicators.
B) coincidental economic indicators.
C) lagging economic indicators.
D) not useful as economic indicators.