BMC STUDY GUIDES WITH CORRECT
ANSWERS
ECOW - CORRECT ANSWER-Economic data watch: finds
most important data by country
Essential economic indicators - CORRECT ANSWER-
Economic growth
Inflation
Unemployment
Business confidence
Housing
Economic growth: gdp - CORRECT ANSWER-Market value of
all final goods and services produced in a country
Broadest and most comprehensive barometer of economic
activity
GDP = C + I + G + (X-M) - CORRECT ANSWER-C= personal
consumption (food)
I= private investment (a factory)
G=government consumption (a battleship)
X= exports
M= imports
(X-M) = net exports
ECST - CORRECT ANSWER-US GDP breakdown
,Nominal GDP growth (%) - CORRECT ANSWER-Takes into
account increases in production and increases in prices of
goods and services
Real GDP Growth (%)*** - CORRECT ANSWER-Isolates
increases in production
More insightful for investors
Nominal GDP Growth (%) - Inflation (%) = Real GDP Growth
(%) - CORRECT ANSWER-
Recession - CORRECT ANSWER-Two successive quarters of
negative real GDP growth
Inflation - CORRECT ANSWER-General increase in the prices
of goods and services which diminishes the purchasing power
of money
Erodes value of bonds
GDP price deflator - CORRECT ANSWER-This price index is
used to remove inflation from nominal GDP
Consumer price index - CORRECT ANSWER-an index of the
cost of all goods and services to a typical consumer
Monthly
Inflation baskets- different for each country
Also as technology improves and tastes change, the
goods/services in the baskets change as well in order to most
accurately represent inflation rate
Why do investors care about unemployment? - CORRECT
ANSWER-Overall increase in unemployment depresses GDP
growth
^for US bc US is largely a consumer economy
,GDP CYOY index - CORRECT ANSWER-US year over year
real GDP growth
ISM: institute for supply management - CORRECT ANSWER-
Has index of business confidence - the PMI purchasing
manager's index
>50 = optimism
<50 = pessimism
Which correlates with GDP (very similar on graph)
Housing - CORRECT ANSWER-House building = only 3% of
us economy but is a strong indicator for how economy is doing
because
1 before house is built, need to believe that consumers are
confident enough to assume a 30 year mortgage
2 after buying a house, consumers buy everything else that
goes with it - TVs, couches, landscaping services, etc
NHSPSTOT Index - CORRECT ANSWER-Housing starts index
; relationship with real gdp growth on graph
When nominal GDP growth is below real GDP growth? -
CORRECT ANSWER-Denotes negative inflation aka deflation
Best leading economic indicator? - CORRECT ANSWER-PMI:
purchasing managers index
"Misery index" - CORRECT ANSWER-To measure consumer
pain
Inflation rate + unemployment rate
What typically happens to nonfarm payrolls, the PMI indicator,
and housing starts at the onset of a recession in the US? -
CORRECT ANSWER-Nonfarm payrolls go DOWN, PMI
indicator goes DOWN, housing starts goes DOWN
WECO - CORRECT ANSWER-World economic calendar
, Click US to see list of chronological list of economic indicators
to be released after Jan 1st
1st inkling: PMI bc published on the first business day of the
following month (for January)
Actual = published economic indicator value
On right side: Surv(m) = median estimate by analysts of what
the value of the economic indicator will be upon release
* if actual > estimate = pleasant surprise
if actual < estimate = unpleasant surprise
Nonfarm payrolls: published on the first Friday of the following
month (same as actual and survey values as above)
Housing starts: comes out middle of following month (actual
and survey)
CPI (inflation) : published middle of following month (actual and
survey)
GDP: released at every quarter (a month after the end of a
quarter)
ECOS (right click on survey amount) - CORRECT ANSWER-
Economic estimates function - shows how that number was
developed
ECFC - CORRECT ANSWER-Economic forecasts
ECSU - CORRECT ANSWER-Economics surprise monitor
US - 40 handpicked meaningful leading indicators
(Surprise shows if it was above or below projected)
Bloomberg ECO US Surprise Index: all surprise indicators are
aggregated to make this number
ANSWERS
ECOW - CORRECT ANSWER-Economic data watch: finds
most important data by country
Essential economic indicators - CORRECT ANSWER-
Economic growth
Inflation
Unemployment
Business confidence
Housing
Economic growth: gdp - CORRECT ANSWER-Market value of
all final goods and services produced in a country
Broadest and most comprehensive barometer of economic
activity
GDP = C + I + G + (X-M) - CORRECT ANSWER-C= personal
consumption (food)
I= private investment (a factory)
G=government consumption (a battleship)
X= exports
M= imports
(X-M) = net exports
ECST - CORRECT ANSWER-US GDP breakdown
,Nominal GDP growth (%) - CORRECT ANSWER-Takes into
account increases in production and increases in prices of
goods and services
Real GDP Growth (%)*** - CORRECT ANSWER-Isolates
increases in production
More insightful for investors
Nominal GDP Growth (%) - Inflation (%) = Real GDP Growth
(%) - CORRECT ANSWER-
Recession - CORRECT ANSWER-Two successive quarters of
negative real GDP growth
Inflation - CORRECT ANSWER-General increase in the prices
of goods and services which diminishes the purchasing power
of money
Erodes value of bonds
GDP price deflator - CORRECT ANSWER-This price index is
used to remove inflation from nominal GDP
Consumer price index - CORRECT ANSWER-an index of the
cost of all goods and services to a typical consumer
Monthly
Inflation baskets- different for each country
Also as technology improves and tastes change, the
goods/services in the baskets change as well in order to most
accurately represent inflation rate
Why do investors care about unemployment? - CORRECT
ANSWER-Overall increase in unemployment depresses GDP
growth
^for US bc US is largely a consumer economy
,GDP CYOY index - CORRECT ANSWER-US year over year
real GDP growth
ISM: institute for supply management - CORRECT ANSWER-
Has index of business confidence - the PMI purchasing
manager's index
>50 = optimism
<50 = pessimism
Which correlates with GDP (very similar on graph)
Housing - CORRECT ANSWER-House building = only 3% of
us economy but is a strong indicator for how economy is doing
because
1 before house is built, need to believe that consumers are
confident enough to assume a 30 year mortgage
2 after buying a house, consumers buy everything else that
goes with it - TVs, couches, landscaping services, etc
NHSPSTOT Index - CORRECT ANSWER-Housing starts index
; relationship with real gdp growth on graph
When nominal GDP growth is below real GDP growth? -
CORRECT ANSWER-Denotes negative inflation aka deflation
Best leading economic indicator? - CORRECT ANSWER-PMI:
purchasing managers index
"Misery index" - CORRECT ANSWER-To measure consumer
pain
Inflation rate + unemployment rate
What typically happens to nonfarm payrolls, the PMI indicator,
and housing starts at the onset of a recession in the US? -
CORRECT ANSWER-Nonfarm payrolls go DOWN, PMI
indicator goes DOWN, housing starts goes DOWN
WECO - CORRECT ANSWER-World economic calendar
, Click US to see list of chronological list of economic indicators
to be released after Jan 1st
1st inkling: PMI bc published on the first business day of the
following month (for January)
Actual = published economic indicator value
On right side: Surv(m) = median estimate by analysts of what
the value of the economic indicator will be upon release
* if actual > estimate = pleasant surprise
if actual < estimate = unpleasant surprise
Nonfarm payrolls: published on the first Friday of the following
month (same as actual and survey values as above)
Housing starts: comes out middle of following month (actual
and survey)
CPI (inflation) : published middle of following month (actual and
survey)
GDP: released at every quarter (a month after the end of a
quarter)
ECOS (right click on survey amount) - CORRECT ANSWER-
Economic estimates function - shows how that number was
developed
ECFC - CORRECT ANSWER-Economic forecasts
ECSU - CORRECT ANSWER-Economics surprise monitor
US - 40 handpicked meaningful leading indicators
(Surprise shows if it was above or below projected)
Bloomberg ECO US Surprise Index: all surprise indicators are
aggregated to make this number
