Series 52: Exercise

Exercise

Answer the following questions.

1. 1. Why are housing starts an important leading indicator?
2. I. Because construction projects take at least a few months, housing starts indicate optimism on the part of investors and consumers.
3. II. Construction projects have a ripple effect—new workers may be hired and materials must be purchased, boosting the economy.
4. III. Housing is the biggest industry within the GDP.
5. IV. The Fed may react to an increase in housing starts by reducing interest rates to make money less expensive to businesses and potential homeowners.
6. A. I and IV
7. B. I and II
8. C. II and III
9. D. III and IV
10. 2. The M1 money supply includes which of the following:
11. I. Currency in circulation
12. II. CDs and money market funds
13. III. Checking accounts
14. IV. Repurchase agreements
15. A. I and II
16. B. I and III
17. C. II and IV
18. D. II and III

Answers