CEA Macroeconomic Indicators 5

Question 1

What does a positively sloped yield curve typically signal about economic expectations?

Accepted Answer

Future economic expansion and rising short-term rates

Answer

A normal upward-sloping yield curve reflects market expectations of economic growth and higher future interest rates.

Question 2

Which index measures price changes at the wholesale level before goods reach consumers?

Accepted Answer

PPI

Answer

The Producer Price Index (PPI) tracks the average change in prices received by domestic producers for their output and is a leading signal for consumer inflation.

Question 3

Country X has a trade deficit and a fiscal surplus. According to the twin deficits hypothesis, this combination is:

Accepted Answer

Consistent if private saving exceeds private investment

Answer

CA = (S − I) + (T − G); if the government runs a surplus (T > G), private sector saving can still be less than investment, sustaining a trade deficit.

Question 4

Real GDP per capita is generally preferred over nominal GDP per capita as a living-standard measure because it:

Accepted Answer

Controls for changes in the price level

Answer

Real GDP per capita adjusts for inflation so comparisons across time reflect actual changes in the quantity of goods and services, not just price increases.

Question 5

Which statement about the labor force participation rate is correct?

Accepted Answer

It falls when discouraged workers stop searching and exit the labor force

Answer

Discouraged workers who stop actively seeking work are no longer counted as unemployed OR in the labor force, reducing the participation rate.

(CEA) Certified Economic Analyst Practice Test

(CEA) Certified Economic Analyst Practice Test

CEA Macroeconomic Indicators 5