Economic Indicators and Interest Review

Using the Rule of 72, calculate how many years it will take for $2,000 to double if the interest rate is 4.5%. Round to the nearest year.

(a)  

What are the two main functions of the Federal Reserve?

• fight inflation and maintain full employment
• control interest rates and report GDP
• decrease the unemployment rate and build business confidence
• maintain reasonable numbers in CPI, PMI, and GDP

What entity controls the interest rates?

• Secretary of Treasury
• Federal Reserve
• Monetary Building Organization
• Central Banks

Currently, who is the Federal Reserve Board Chair?

• Alan Greenspan
• Jerome Powell
• Janet Yellen
• Ben Bernanke

The Employment Situation Report, also known as the Jobs Report, provides a key set of data when it comes to the health of our economy. What are two big components of this report?

• current industries hiring and layoffs
• political policies based on parties and job outlook
• newly created jobs and unemployment rate
• none of these

Inflation is always occurring, with an average of _____ each year being considered normal and healthy.

• 1%
• 2%
• 3%
• 4%

Generally, when the Consumer Price Index (CPI) is high, what happens to the interest rates?

• increase
• decrease
• stays the same

The PMI survey provided by the Institute for Supply Management provides a point value above which is a sign of growth and below is a sign of a slowing economy. What is that number?

• 15
• 25
• 50
• 75
• 100

If you have $500 to invest, which scenario would yield you the most return? In other words, which one will give you the most money?

• 5% compounded semi annually for 5 years
• 5% compounded annually for 5 years
• 5% simple interest for 5 years
• 5% compounded quarterly for 5 years

According to recent news, what is the Federal Reserve expected to do at their next meeting?

• lower interest rates
• increase interest rates
• decrease unemployment
• add more new jobs