1. What is the main goal of fundamental analysis in trading?
Predicting price purely from chart patterns Studying economic, financial, and policy data to judge an asset's true value or likely direction Following other traders' positions exactly Ignoring news and only using volume indicators
2. Which central bank has historically fought deflation rather than inflation for much of the last few decades?
The Federal Reserve The European Central Bank The Bank of Japan The Reserve Bank of Australia
3. Why does the Reserve Bank of Australia's policy often reflect global commodity demand, especially from China?
Australia has a dual inflation mandate like the Fed Australia's economy is closely tied to commodity exports The RBA sets rates for the entire Pacific region Australia uses the US dollar as its reserve currency
4. When a bond's price rises while its coupon stays fixed, what happens to its yield?
Yield rises Yield falls Yield stays exactly the same Yield becomes negative automatically
5. Why do rising government bond yields, relative to another country's, often strengthen a currency?
Higher yields typically attract capital seeking better returns Higher yields always signal an imminent recession Bond yields have no real connection to currency flows It only affects stock markets, not Forex
6. What does an inverted yield curve typically mean?
Long-term yields are higher than short-term yields, signaling strong growth ahead Short-term yields rise above long-term yields, often signaling investors expect future rate cuts due to slower growth All bond yields become identical across every maturity The central bank has stopped issuing new bonds
7. Which two Treasury maturities are most commonly compared to check for a yield curve inversion?
3-month and 6-month 2-year and 10-year 1-year and 30-year 5-year and 7-year
8. On the PMI scale, what does a reading above 50.0 indicate?
Contraction in the surveyed sector Expansion in the surveyed sector The central bank is about to cut rates Inflation is guaranteed to rise
9. Why is PMI considered a leading indicator?
It is based on final government transaction data It comes out only once per year It reflects business managers' real-time perceptions and is published quickly, ahead of slower hard data like GDP It only measures consumer sentiment, not business activity
10. Why can a falling headline unemployment rate sometimes be misleading?
The rate can fall because discouraged workers left the labor force, not because more people found jobs Unemployment rate is always adjusted for inflation The unemployment rate never actually changes month to month It only measures unemployment among government workers
11. Besides the headline unemployment rate, what else should traders check in a jobs report for a fuller picture?
Only the stock market's reaction Payroll growth, wage growth, and labor force participation rate The exchange rate from five years ago Only the PMI report from the same week
12. Why does retail sales data carry extra weight in economies like the United States?
It measures government spending exclusively Consumer spending makes up a large share, roughly two-thirds, of GDP in the US It directly sets the central bank's interest rate It only affects the bond market, never currencies
13. What is an important caveat when reading headline retail sales figures?
They are always adjusted for inflation automatically They are reported in nominal dollar terms, so rising sales during high inflation don't necessarily mean more goods were bought They only cover online purchases They are released once a decade
14. What distinguishes consumer confidence data from 'hard' data like retail sales?
Confidence data is based on perception and surveys rather than actual recorded transactions Confidence data is always more accurate than hard data Confidence data is released by central banks only There is no real difference between the two
15. According to the module, what should traders do when soft data (like consumer confidence) and hard data (like retail sales) diverge sharply?
Ignore both data sets entirely Assume the soft data is always wrong Treat the divergence as a possible early sign of a turning point that hasn't been confirmed yet Immediately close all open positions
16. Which of the following best describes the relationship between an economic calendar and fundamental analysis?
The economic calendar has no connection to fundamental analysis The economic calendar lists upcoming scheduled data releases and events that fundamental analysis uses to anticipate market-moving news The economic calendar only tracks company earnings dates The economic calendar replaces the need for any central bank analysis