BMC Answers (Bloomberg) 2023/2024, Complete
solutions (A+ guide) University of Massachusetts,
Lowell.
How accurately do GDP statistics portray the economy and why? - ANSWER Just
because they are official and numerical does not mean they are accurate. The term
"domestic" in GDP unambiguously links to a nation state.
Why is economic data helpful in the investment process? - ANSWER If an economy
is doing well then certain companies will sell more of their product as household
budgets also increase.
What 5 data inputs matters most to investors? - ANSWER Economic growth,
inflation, unemployment, business confidence, and housing.
How do you calculate GDP? - ANSWER GDP= C + I = G + (X-M). C= Personal
consumption. I= private investment. G= government consumption. X= exports. M=
imports. (X-M)= net exports.
nominal growth (growth rate) - ANSWER increases in production and increases in
price
real GDP - ANSWER isolates increases in production
If growth rate (nominal GDP) = inflation rate, then... - ANSWER real growth rate is at
zero.
If Nominal GDP rate > inflation rate, then... - ANSWER Real Growth Rate is positive.
Is the economy cyclical? - ANSWER Yes, there are quarters of growth and
recession.
Recession - ANSWER two successive quarters of negative real GDP growth
Inflation (CPI) - ANSWER unveils the real growth in the economy. It can erode the
value of bonds. It means that a unit of money tomorrow buys less than the same unit
of money would buy today. This accounts for the rising cost of living. Increase in
prices of goods and services that diminishes purchasing power of money.
What are the two sources for inflation reports? - ANSWER GDP Report: based on
whole economy. Consumer Price Index: based on representative basket of goods,
and services, like food, housing and automobiles
How does time change representative inflation baskets? - ANSWER With changes in
technology. Like DVD players are replaced with online streaming.
, If nominal GDP growth line or percentage is less than the real GDP, then... -
ANSWER there is deflation.
Why is unemployment so important to the US economy? - ANSWER The fact that
the US is largely a consumer economy leads to the tight connection between US
employment and US GDP. An overall increase in unemployment depresses GDP
growth. When the economy shrinks, employment declines.
Nonfarm payrolls - ANSWER measure the change in the number of people with jobs
and during a recession, this goes down. This is the unemployment report.
Business confidence (PMI): - ANSWER business people make large investments
and hire people when they think there will be additional demand in the future. BEST
LEADING INDICATOR TO ALERT FORTHCOMING TURNING POINTS.
The Institute for Supply Management (ISM) - ANSWER Surveys people in charge of
buying goods and services for corporations about business conditions. It has the
most widely followed index of US business confidence. Above 50= optimism. Below
50= pessimism.
Can PMI indicate GDP growth? - ANSWER Yes, for most recessions shown, the PMI
indicator dipped shortly before GDP decline. You can predict GDP decline.
why is housing a good economic indicator? - ANSWER homeowners build houses,
they need to believe that consumers can assume a 30-year mortgage. After buying a
new house, people buy furniture, tvs, gaming systems, redo kitchens, etc. Housing
against real GDP can also show a relationship= positive and positive
Where on the terminal can you find a chronological list of indicators that will be
released after January 1? - ANSWER World Economic Calendar
Which indicators get the most attention? - ANSWER PMI and nonfarm payrolls (get
most attention): January's number is published in February. If the Actual exceeds the
estimate, that is a good sign! If it doesn't, it is a bad sign. Housing comes out every
month and a half. CPI (inflation) released: middle of every month.
Is GDP important for economic growth? - ANSWER No, "New news" moves markets,
GDP is old news—released after we already know what is going on because of other
economic indicators.
Analysts maintain estimates. What is in the Relevance column? - ANSWER Volume
of alerts set up for each indicator. The greater the investor interest, the greater the
relevance. Both are at full strength for PMI and employment.
The Survey column - ANSWER Contains the analyst consensus forecast for that
indicator. Terminal has the analyst estimates, the actual previous rate, and the
previous rate.
How do you calculate the Median Estimate for PMI? - ANSWER Calculated by taking
the average of the estimates from 80+ economists.
solutions (A+ guide) University of Massachusetts,
Lowell.
How accurately do GDP statistics portray the economy and why? - ANSWER Just
because they are official and numerical does not mean they are accurate. The term
"domestic" in GDP unambiguously links to a nation state.
Why is economic data helpful in the investment process? - ANSWER If an economy
is doing well then certain companies will sell more of their product as household
budgets also increase.
What 5 data inputs matters most to investors? - ANSWER Economic growth,
inflation, unemployment, business confidence, and housing.
How do you calculate GDP? - ANSWER GDP= C + I = G + (X-M). C= Personal
consumption. I= private investment. G= government consumption. X= exports. M=
imports. (X-M)= net exports.
nominal growth (growth rate) - ANSWER increases in production and increases in
price
real GDP - ANSWER isolates increases in production
If growth rate (nominal GDP) = inflation rate, then... - ANSWER real growth rate is at
zero.
If Nominal GDP rate > inflation rate, then... - ANSWER Real Growth Rate is positive.
Is the economy cyclical? - ANSWER Yes, there are quarters of growth and
recession.
Recession - ANSWER two successive quarters of negative real GDP growth
Inflation (CPI) - ANSWER unveils the real growth in the economy. It can erode the
value of bonds. It means that a unit of money tomorrow buys less than the same unit
of money would buy today. This accounts for the rising cost of living. Increase in
prices of goods and services that diminishes purchasing power of money.
What are the two sources for inflation reports? - ANSWER GDP Report: based on
whole economy. Consumer Price Index: based on representative basket of goods,
and services, like food, housing and automobiles
How does time change representative inflation baskets? - ANSWER With changes in
technology. Like DVD players are replaced with online streaming.
, If nominal GDP growth line or percentage is less than the real GDP, then... -
ANSWER there is deflation.
Why is unemployment so important to the US economy? - ANSWER The fact that
the US is largely a consumer economy leads to the tight connection between US
employment and US GDP. An overall increase in unemployment depresses GDP
growth. When the economy shrinks, employment declines.
Nonfarm payrolls - ANSWER measure the change in the number of people with jobs
and during a recession, this goes down. This is the unemployment report.
Business confidence (PMI): - ANSWER business people make large investments
and hire people when they think there will be additional demand in the future. BEST
LEADING INDICATOR TO ALERT FORTHCOMING TURNING POINTS.
The Institute for Supply Management (ISM) - ANSWER Surveys people in charge of
buying goods and services for corporations about business conditions. It has the
most widely followed index of US business confidence. Above 50= optimism. Below
50= pessimism.
Can PMI indicate GDP growth? - ANSWER Yes, for most recessions shown, the PMI
indicator dipped shortly before GDP decline. You can predict GDP decline.
why is housing a good economic indicator? - ANSWER homeowners build houses,
they need to believe that consumers can assume a 30-year mortgage. After buying a
new house, people buy furniture, tvs, gaming systems, redo kitchens, etc. Housing
against real GDP can also show a relationship= positive and positive
Where on the terminal can you find a chronological list of indicators that will be
released after January 1? - ANSWER World Economic Calendar
Which indicators get the most attention? - ANSWER PMI and nonfarm payrolls (get
most attention): January's number is published in February. If the Actual exceeds the
estimate, that is a good sign! If it doesn't, it is a bad sign. Housing comes out every
month and a half. CPI (inflation) released: middle of every month.
Is GDP important for economic growth? - ANSWER No, "New news" moves markets,
GDP is old news—released after we already know what is going on because of other
economic indicators.
Analysts maintain estimates. What is in the Relevance column? - ANSWER Volume
of alerts set up for each indicator. The greater the investor interest, the greater the
relevance. Both are at full strength for PMI and employment.
The Survey column - ANSWER Contains the analyst consensus forecast for that
indicator. Terminal has the analyst estimates, the actual previous rate, and the
previous rate.
How do you calculate the Median Estimate for PMI? - ANSWER Calculated by taking
the average of the estimates from 80+ economists.
