Questions 31 through 42 relate to Economics. (18 minutes)
A business cycle theory developed by applying utility theory and budget constraints to macroeconomic models is most
closely associated with which school of economic thought?
A)
Austrian.
B)
New Classical.
C)
New Keynesian.
Question #32 of 120 Question ID: 1146068A central bank is said to have credibility if:
it issues inflation reports monthly.
economic actors base decisions on the central bank’s
stated inflation targets.
it determines both the policy rate and the method for
computing the inflation rate.
Question #33 of 120 Question ID: 1146077Consider the following foreign exchange and interest rate information:
Spot rate: 1.3382 USD/EUR.
One year riskless USD rate = 2.5%.
One year riskless EUR rate = 3.5%.
The one-year arbitrage-free forward exchange rate is closest to:
1.2391 USD/EUR.
1.3253 USD/EUR.
1.3513 USD/EUR.
Question #34 of 120 Question ID: 1146075Other things equal, a country is most likely to have a current account deficit if it also has:
a low savings rate.
a government budget surplus.
a low rate of domestic investment.
Question #35 of 120 Question ID: 1146056Which of the following statements about monopolists is most accurate?
Monopolists have imperfect information about the
demand curve for their product.
Without government intervention, monopolists will
always earn economic profits.
A monopolist maximizes total revenue where marginal
revenue equals marginal cost.
Question #36 of 120 Question ID: 1146069A central bank's ability to achieve its policy goals is most likely to be limited by available resources when which of the
following actual rates is above its target rate?
Interest rate.
Inflation rate.
Exchange rate.
Question #37 of 120 Question ID: 1146065Which of the following statements regarding the money supply and determination of short-term interest rates is least
accurate?
On balance, growth in real GDP tends to increase the
transactional demand for money.
If the short-term interest rate is greater than the
equilibrium rate, there will be excess supply of real
money balances.
An increase in the real money supply from an initial
equilibrium situation will cause households and
businesses to sell interest- bearing securities.
Question #38 of 120 Question ID: 1146059What are the most likely effects on aggregate demand in the current period of an increase in expected future incomes and
of an increase in the money supply?
Both increase aggregate demand.
Both decrease aggregate demand.
One increases aggregate demand and one decreases
aggregate demand.
Incorrect production decisions are most likely to occur when the inflation rate is:
lower than expected only.
higher than expected only.
either higher or lower than expected.
Question #40 of 120 Question ID: 1146073The source of comparative advantage, according to the Heckscher- Ohlin model of international trade, is each country's:
labor productivity.
available natural resources.
relative amounts of labor and capital.
Question #41 of 120 Question ID: 1146057Under which market structure is the profit maximizing strategy to produce the quantity of output for which the price is
equal to marginal cost?
Monopoly.
Perfect competition.
Monopolistic competition.
Question #42 of 120 Question ID: 1146054Which of the following statements about elasticity is least accurate?
Both demand and supply are more elastic in the long run
than in the short run.
When demand is inelastic, an increase in price will
cause a decrease in the total expenditure on a good.
When the price of a product increases, consumers will
reduce their consumption by a larger amount in the long
run than in the short run.
Question #43 of 120 Question ID: 1146086
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