Economics and Finance Flashcards
7 cards from real CFPT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Economics and Finance flashcards as text
Which of the following best describes a 'fixed exchange rate regime'?
Answer: The government or central bank pegs the currency's value to another currency or commodity
Under a fixed exchange rate, authorities maintain the currency's value at a set rate against a reference asset, requiring intervention in foreign exchange markets.
The Bank for International Settlements (BIS) is often described as the 'central bank for central banks' because it:
Answer: Provides banking services to central banks and fosters international monetary cooperation
The BIS in Basel, Switzerland facilitates cooperation among central banks, conducts economic research, and provides financial services to monetary authorities.
In the context of development economics, 'brain drain' refers to:
Answer: The emigration of highly skilled or educated workers from developing to developed countries
Brain drain occurs when talented professionals leave their home country, depriving it of human capital while potentially benefiting destination countries.
What is a 'sovereign wealth fund' (SWF)?
Answer: A state-owned investment fund fed by government revenues, often from commodity exports
SWFs are government-owned investment pools, often funded by commodity export revenues, that invest in assets globally to benefit future generations.
The U.S. Foreign Corrupt Practices Act (FCPA) is relevant to consular work because it:
Answer: Prohibits U.S. persons and entities from bribing foreign government officials
The FCPA makes it illegal for U.S. companies and individuals to bribe foreign officials to obtain or retain business, a key anti-corruption law in international commerce.
Which economic concept explains why countries specialize in and export goods for which they have a lower opportunity cost of production?
Answer: Comparative advantage
Comparative advantage, developed by David Ricardo, explains why mutually beneficial trade occurs even if one country is more efficient at producing everything.
From a consular economics perspective, a spike in a country's unemployment rate is most directly relevant to visa adjudications because it:
Answer: May signal economic hardship that increases emigration pressure and raises nonimmigrant intent concerns
High unemployment can indicate economic conditions that motivate migration, which consular officers consider when assessing an applicant's ties to their home country.