Home - Cfa Level 1 - Practice Questions - Economics - Economics Section 2

Economics - Economics Section 2 Online Exam Quiz

Important questions about Economics - Economics Section 2. Economics - Economics Section 2 MCQ questions with answers. Economics - Economics Section 2 exam questions and answers for students and interviews.

1. During the early expansion phase of a business cycle, inflation is most likely to:

Options

A : pick up modestly.

B : decelerate but with a lag.

C : remain moderate and may continue to fall.

D :

2. A recession is least likely associated with:

Options

A : rising unemployment.

B : declining capital spending.

C : stable inflation.

D :

3. In a business cycle, a trough is most likely to be followed by a/an:

Options

A : contraction.

B : expansion.

C : peak.

D :

4. The unemployment rate is most likely to rise during which phase of the business cycle?

Options

A : contraction.

B : early expansion.

C : peak.

D :

5. An analyst states that ‘Inflation picks up modestly during this phase of the business cycle.’ Which phase is she most likely referring to?

Options

A : Contraction

B : Early expansion

C : Late expansion

D :

46. To act as a liberating medium of exchange, money should least likely be:

Options

A : Easily divisible.

B : Easy to counterfeit.

C : High value relative to weight.

D :

47. If the reserve requirement for banks in an economy is 8%, the total money created from a deposit of $100 into an account is closest to:

Options

A : $800.

B : $1,050.

C : $1,250.

D :

48. Given that the reserve requirement in an economy is 10 percent for banks, how much money can be created with a deposit of $200?

Options

A : $220.

B : $1,800.

C : $2,000.

D :

49. The speculative demand for money refers to the demand to hold money:

Options

A : to use in the purchase of goods and services.

B : as a buffer against unforeseen events.

C : based on the opportunity or risks inherent in other financial instruments.

D :

50. If the expected return on other assets fall, the speculative demand for money will:

Options

A : increase.

B : decrease.

C : remain unaffected.

D :

51. A contraction in the money supply would most likely:

Options

A : lead to an increase in nominal interest rates.

B : lead to a decrease in nominal interest rates.

C : increase the equilibrium amount of money that economic agents would wish to hold.

D :

52. As the gross domestic product (GDP) grows over time:

Options

A : transactions money balances increase and precautionary money balances decrease.

B : transactions money balances decrease and precautionary money balances increase.

C : both transactions and precautionary money balance increase.

D :

53. Which of the following is most likely correct about the quantity equation of exchange?

Options

A : The velocity of money is assumed to be approximately constant.

B : The spending, P * V, is approximately proportional to quantity of money, M.

C : If money neutrality holds, an increase in the money supply, M, affects Y, real output.

D :

54. Due to high inflation, businesses constantly have to change the advertised prices of their goods and services. This is best described as:

Options

A : menu costs.

B : shoe leather costs.

C : inflation uncertainty

D :

55. Unexpected inflation least likely:

Options

A : leads to inequitable transfers of wealth between borrowers and lenders.

B : gives rise to risk premia in borrowing rates and the prices of other assets.

C : increases the information content of market prices.

D :

56. Which of the following is least likely a cost associated with expected inflation?

Options

A : Demand costs

B : Menu costs

C : Shoe leather costs

D :

57. If a central bank announces an increase in its official interest rate, the money supply will most likely:

Options

A : increase.

B : decrease.

C : remain unaffected.

D :

58. Assume that the central bank increases the reserve requirement. The most likely effect will be:

Options

A : a decrease in the money multiplier.

B : an increase in the money supply.

C : an increase in new deposits.

D :

59. According to the monetary transmission mechanism, implementation of the monetary policy is most likely to work through the economy via:

Options

A : bank lending rates.

B : exchange rates.

C : both bank lending rates and exchange rates.

D :

60. A change in a central bank’s policy rate will affect:

Options

A : asset prices only.

B : expectations about future interest rates only.

C : both asset prices and expectations about future interest rates.

D :

Cfa Level 1 - Practice Questions more Online Exam Quiz

Copyright © 2021
Exam-GK-MCQ-Questions.Com | Contact Us | Privacy Policy | Terms of Use | Sitemap | 0.01850700378418