CEA Study Guide 2026
Everything you need to pass the CEA exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📋 CEA Exam Format at a Glance
📚 CEA Topics to Study (21)
✍️ Sample CEA Questions & Answers
1. Efficiency wage theory suggests that firms pay workers above the market-clearing wage primarily because:
Efficiency wage theory holds that above-equilibrium wages motivate workers to avoid dismissal, reduce costly turnover, and attract higher-quality applicants.
2. A leftward shift in the labor supply curve in a competitive market most likely indicates:
A leftward labor supply shift means fewer workers are willing to work at any given wage, driven by demographic aging, early retirement, rising transfer income, or rising non-market opportunity costs.
3. What is the mean in statistics?
In statistics, the mean is the most common measure of central tendency, representing the average value of a dataset. It is calculated by summing all the values in a set and then dividing by the total number of values. The mean provides a single value that summarizes the typical magnitude of the data.
4. Within the Mundell-Fleming model for a small open economy with perfect capital mobility, under a floating exchange rate regime, an expansionary fiscal policy will lead to:
In the Mundell-Fleming model with a floating exchange rate and perfect capital mobility, an expansionary fiscal policy (e.g., increased government spending) shifts the IS curve to the right. This puts upward pressure on the domestic interest rate, attracting capital inflows. These inflows cause the domestic currency to appreciate. The currency appreciation makes exports more expensive and imports cheaper, thus reducing net exports. This reduction in net exports completely offsets the initial fiscal expansion, shifting the IS curve back to its original position, resulting in no change in output.
5. What is the purpose of policy evaluation?
Policy evaluation is the systematic process of assessing whether a public policy or program is achieving its intended goals and producing the desired outcomes. It involves collecting and analyzing data to determine the policy's impact, efficiency, and relevance. This crucial feedback helps policymakers understand what works, identify areas for improvement, and make informed decisions about future policy adjustments or development.
6. What is correlation?
Correlation is a statistical measure that describes the extent to which two variables tend to move together. It quantifies the strength and direction of a linear relationship between two variables, ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation). It's important to note that correlation does not imply causation.