AIP Macroeconomics & Market Analysis 3

Question 1

Fiscal policy refers to government use of:

Accepted Answer

Taxation and spending to influence economic activity

Answer

Interest rate adjustments to control money supply

Answer

Reserve requirement changes to regulate bank lending

Answer

Currency interventions to stabilize exchange rates

Question 2

Which global economic concept describes the idea that similar goods should sell for the same price across countries when expressed in a common currency?

Accepted Answer

Purchasing power parity (PPP)

Answer

Comparative advantage

Answer

Balance of payments equilibrium

Answer

Current account surplus neutrality

Question 3

A 'bear market' in equities is conventionally defined as a decline of at least:

Accepted Answer

20% from a recent high

Answer

10% from a recent high

Answer

30% from a recent high

Answer

15% from a recent high

Question 4

Stagflation is an economic condition characterized by:

Accepted Answer

High inflation occurring simultaneously with stagnant economic growth and high unemployment

Answer

High growth combined with low inflation

Answer

Rapid deflation with rising unemployment

Answer

A period of sustained GDP growth following a recession

Question 5

Which of the following best describes 'capital flows' in an international context?

Accepted Answer

Movement of money for investment, trade, or business operations across borders

Answer

The physical shipment of gold reserves between central banks

Answer

Government grants provided to developing nations

Answer

Changes in a country's domestic money supply

Question 6

In analyzing market efficiency, the 'semi-strong form' of the Efficient Market Hypothesis (EMH) states that:

Accepted Answer

All publicly available information is already reflected in stock prices

Answer

Only historical price data is already reflected in stock prices

Answer

All public and private information is already reflected in stock prices

Answer

Markets are only efficient for large-cap stocks

Question 7

When a central bank intervenes to weaken its currency in foreign exchange markets, the likely intended effect on exports is:

Accepted Answer

Exports become cheaper and more competitive in foreign markets

Answer

Exports become more expensive and less competitive globally

Answer

Export volumes decline due to reduced domestic production

Answer

No effect on exports as currency values are independent of trade