AIP Macroeconomics & Market Analysis 3

Question 1

Fiscal policy refers to government use of:

Accepted Answer

Taxation and spending to influence economic activity

Answer

Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence macroeconomic conditions such as growth, employment, and inflation.

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

Purchasing power parity (PPP) holds that exchange rates should adjust so that identical goods cost the same in different countries when priced in a common currency.

Question 3

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

Accepted Answer

20% from a recent high

Answer

A bear market is conventionally defined as a decline of 20% or more in a major market index from its most recent peak.

Question 4

Stagflation is an economic condition characterized by:

Accepted Answer

High inflation occurring simultaneously with stagnant economic growth and high unemployment

Answer

Stagflation combines stagnant economic growth, high unemployment, and high inflation simultaneously — a challenging combination because standard policy responses to one problem can worsen the others.

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

International capital flows refer to the movement of financial assets such as investments, loans, and currencies across national borders for purposes of trade and investment.

(AIP) Accredited Investment Professional Certification Practice Test

(AIP) Accredited Investment Professional Certification Practice Test

AIP Macroeconomics & Market Analysis 3