test1 - | Logged in as 7298841 Introduction Economics Total score 15 out of 30 50 Question Feedback Block 1 TOS Question 1 of 1 By accessing this

test1 - | Logged in as 7298841 Introduction Economics Total...

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May 29 2015 | Logged in as : 7298841 Introduction Economics Total score: 15 out of 30, 50% Question Feedback Block 1: TOS Question 1 of 1 By accessing this assessment, you agree to the following terms of use: The practice tests and mock exams are provided to currently registered CFA candidates. Candidates may view and print the exams for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting access by anyone other than currently registered CFA candidates and copying, posting to any website, e-mailing, distributing, and/or reprinting the practice tests and mock exams for any purpose. I agree. Block 2: Question block created by wizard Question 1 of 30 The crowding-out effect is most likely associated with: decreasing government borrowing. increasing government borrowing. falling real interest rates. Correct. The tendency for a government borrowing to decrease private sector investment is called the crowding-out effect. CFA Level I “Monetary and Fiscal Policy, Andrew Clare and Stephen Thomas Section 3.1.3 Question 2 of 30 A market structure characterized by homogeneous/standardized product differentiation is best described as: monopoly. monopolistic competition. perfect competition and oligopoly.
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Correct. Perfect competition and oligopoly are characterized by homogeneous/standardized product differentiation. Market Structure Degree of Product Differentiation Perfect competition Homogeneous/ standardized Monopolistic competition Differentiated Oligopoly Homogeneous/ standardized Monopoly Unique product CFA Level I "The Firm and Market Structures," by Richard G. Fritz and Michele Gambera Section 2.2 Question 3 of 30 In a hypothetical economy, consumption is 70% of pre-tax income, and the average tax rate is 25% of total income. If planned government expenditures are expected to increase by $1.25 billion, the increase in total income and spending, in billions, is closest to: $2.6. $4.2. $1.3. Incorrect. The fiscal multiplier is where C marginal propensity to consume = consumption ÷ disposable income T the tax rate Assuming pre-tax income of $100 Disposable income $100 × (1 – 0.25) = $75 Marginal propensity to consume $70 ÷ $75 = 0.933 The fiscal multiplier 1÷ [1 – (0.933 × (1 – 0.25))] = 3.33 With government expenditure of $1.25 billion, total incomes and spending will rise by $1.25 Billion × 3.33 = $4.2 Billion
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CFA Level I “Monetary and Fiscal Policy,” Andrew Clare and Stephen Thomas Section 3.2.2 Question 4 of 30 If a central bank reduces the money supply, this move will most likely lead to a: rise in nominal interest rates and a decline in aggregate price level. rise in nominal interest rates and a rise in aggregate price level. decline in nominal interest rates and a rise in aggregate price level.
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