The Confidence Index Indicates a Strong Stock Market When the

question 43

Multiple Choice

The confidence index indicates a strong stock market when the

• A) ratio of the average yield on high-grade corporate bonds to the average yield on low-grade corporate bonds rises.
• B) ratio between the average yield on S&P 500 stocks to the average yield on high-grade corporate bonds rises.
• C) consumer confidence index rises above its long-term trend.
• D) demand for bonds declines relative to the demand for equity securities.

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Definitions:

Open-Economy Macroeconomic Model

A model that analyzes an economy that is engaged in international trade, focusing on the interactions with the rest of the world.

Trade Balance

The difference in value between a country's imports and exports over a given period.

Exchange Rate

The value of one currency for the purpose of conversion to another, affecting how much of one currency can be exchanged for another.

Real Interest Rates

The yield that an investor, saver, or lender anticipates or earns, adjusted for the effects of inflation.