CFA Domain 3: Economics (Quiz 2) Welcome to your CFA Practice Quizzes. Note: We designed Two (2) parts of practice quizzes for this Domain. Each part has 20 questions. CFA Domain 3: Economics. (Quiz 2) Please click NEXT to start your Free CFA Practice Quizzes right away. Best of Luck! 1. For a firm operating under perfect competition, the short-run supply function is best described as the: variable cost curve. marginal cost curve. average total cost curve. None 2. Using the expenditure approach to measure gross domestic product (GDP), which of the following is least likely to result in a decline of GDP? Declines in inventories Property losses caused by a natural disaster Reductions in unemployment compensation benefits None 3. The USD/GBP spot rate is 1.3075, and the one-year USD/GBP forward rate is 1.3266. If the one-year USD risk-free interest rate is 4.00%, then the one-year GBP risk-free interest rate is closest to: 2.50% 2.55% 5.51% None 4. Trading bloc members would most likely use a common currency in a: free trade area. economic union. common market. None 5. A Polish consulting company has Polish citizens that reside and provide consulting services in Romania. A Romanian manufacturer has factories in Poland that produce furniture. Which of the following statements is most accurate? Income generated from the: Polish consultants in Romania should be counted in Polish GDP. Polish consultants in Romania should be counted in Romanian GNP. Romanian manufacturer in Poland should be counted in Romanian GNP. None 6. When the commercial banking system holds significant excess reserves, which of the following central bank actions is most likely to affect commercial banks' base lending rates? Changing the official policy rate Changing the reserve requirement Buying or selling securities in the open market None 7. "An analyst gathers the following economic data used to calculate GDP: All else being equal, the economy's amount of net exports (in RUB billions) for this year is closest to:" −6,400 −3,600 6,400 None 8. If spot exchange rate quotes are 0.1427 CAD/SEK and 0.1366 CAD/NOK, the no-arbitrage SEK/NOK spot rate is closest to: 0.0195 0.9573 1.0447 None 9. When a country uses dollarization as a currency regime, which of the following is the most likely consequence? It loses the ability to set its own monetary policy. It maintains foreign currency reserves against its monetary base. Domestic bank interest rates are close to those of the adopted country. None 10. Which of the following statements is least likely consistent with the New Classical school's theory on the business cycle? Supply shocks can shift the aggregate supply curve. The money supply should grow at a constant rate over the business cycle. Utility-maximizing individuals and businesses determine economic equilibrium. None 11. "An analyst compiles the following consumption basket data: Based on this information, the July 20X7 Paasche price index value is closest to:" 93.84 93.89 93.93 None 12. The advantage of automatic stabilizers over discretionary fiscal policy is that they most likely: affect real GDP growth rates more rapidly. have a greater impact on GDP per unit of fiscal expenditure. can be more precisely calibrated to achieve the desired impact. None 13. If a firm is currently breaking even, it is most likely producing at the point where average revenue is equal to: average total costs. average fixed costs. average variable costs. None 14. Which of the following pairs of goods would most likely have positive cross-price elasticity? Printers and ink Print books and ebooks Wood flooring and water bottles None 15. Which of the following is most likely characteristic of monopolistic competition? Low barriers to entry Undifferentiated product Small number of competitors None 16. The Herfindahl-Hirschman Index (HHI) is most likely considered an improvement on the concentration ratio since the HHI better reflects the: effect of mergers. elasticity of demand. threat of new entrants. None 17. For an economy operating at long-run equilibrium GDP, an increase in aggregate demand and a decrease in short-run aggregate supply are most likely to increase: real GDP. price levels. unemployment. None 18. According to the neoclassical growth model, if there is an increase in potential GDP growth, total factor productivity most likely contributes to that increase through: technological progress. growth of the labor force. increases in financial capital. None 19. Which of the following is most likely characteristic of stagflation? Deflation and high unemployment. Disinflation and low unemployment. High inflation and high unemployment. None 20. The school of economic thought most likely to support aggregate demand management as a means of moderating fluctuations of the business cycle is: Austrian. Keynesian. Neoclassical. None 1 out of 20 Time is Up! Time's up
