CEA Cheat Sheet 2026

The 30 highest-yield CEA facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What does standard deviation measure? → Variation or dispersion
2. The Coase Theorem states that externalities can be resolved efficiently through private negotiation when which condition holds? → Property rights are well-defined and transaction costs are negligible
3. Which concept in behavioral economics describes the tendency for individuals to weigh losses more heavily than equivalent gains? → Loss aversion
4. The term 'price leadership' in an oligopoly refers to a situation where: → One firm sets prices and rivals follow
5. What is the purpose of a scatter plot? → Visualize variable relationships
6. When an industry's supply curve is perfectly inelastic in the short run, a demand shock primarily affects: → Market price
7. If the price of a product increases by 10%, and the quantity demanded decreases by 15%, the price elasticity of demand for this product is: → Elastic
8. The Hodrick-Prescott (HP) filter is commonly applied in macroeconomic forecasting to: → Separate a time series into trend and cyclical components
9. An effective limit pricing strategy by an incumbent monopolist sets price: → Low enough that a potential entrant cannot earn non-negative profit if it enters
10. Why is consumer behavior analysis important? → Tailor products to preferences
11. Which measure of money supply includes savings deposits, small time deposits, and retail money market funds? → M2
12. Which situation would most likely cause a fiscal multiplier to be larger? → A closed economy in a deep recession with idle resources
13. If the cross-price elasticity of demand between two goods is negative, the goods are: → Complements
14. A country imposes a countervailing duty. This trade measure targets: → Imports subsidized by a foreign government
15. The concept of identification in econometrics refers to: → The ability to consistently estimate model parameters from the available data
16. The kinked demand curve model of oligopoly is used to explain which market phenomenon? → Price rigidity, where firms are hesitant to change prices.
17. Which market structure is characterized by a few large firms, mutual interdependence, and significant barriers to entry? → Oligopoly
18. The 'Local Average Treatment Effect' (LATE) in instrumental variable estimation applies specifically to: → The effect on units whose treatment status is changed by the instrument (compliers)
19. A firm is producing at a point where marginal cost exceeds marginal revenue. To maximize profit, the firm should: → Decrease output to increase marginal revenue
20. When evaluating a minimum wage increase, a 'bunching estimator' identifies the effect by examining: → Excess mass in the wage distribution at the new minimum
21. Which pricing index is used to deflate personal consumption expenditures and is the Federal Reserve's preferred inflation gauge? → PCE Price Index
22. Under the Mundell-Fleming model with a fixed exchange rate and perfect capital mobility, fiscal policy is: → Highly effective because monetary policy accommodates it
23. In cost-benefit analysis, the 'shadow price' of a non-marketed good refers to: → The implicit value derived from revealed or stated preferences
24. A country's terms of trade improve when: → The price of its exports rises relative to its imports
25. A rightward shift in the aggregate supply curve most likely results in: → Lower price levels and higher output
26. Under contractionary monetary policy, the transmission mechanism to the real economy primarily works through: → Higher interest rates reducing investment, housing, and consumer credit spending
27. The Laffer Curve illustrates the relationship between: → Tax rates and tax revenue
28. When a good has many close substitutes, its price elasticity of demand tends to be: → Elastic
29. Which of the following is the best example of an automatic stabilizer in fiscal policy? → A progressive income tax system where revenues fall as incomes decline during a downturn.
30. In supply and demand analysis, a binding price floor must be set: → Above the equilibrium price