Economic & Financial Concepts Flashcards
7 cards from real IAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Economic & Financial Concepts flashcards as text
Which yield curve shape is typically associated with an inverted relationship between short-term and long-term interest rates, often signaling a potential recession?
Answer: Inverted (downward sloping)
An inverted yield curve, where short-term rates exceed long-term rates, has historically been a reliable predictor of economic recessions.
The Consumer Price Index (CPI) measures inflation by tracking changes in the price of:
Answer: A fixed basket of goods and services purchased by urban consumers
The CPI tracks price changes for a fixed basket of goods and services representative of typical urban consumer purchases.
A country running a current account deficit is best described as one that:
Answer: Imports more goods and services than it exports over a period
A current account deficit means a country's imports of goods, services, and transfers exceed its exports, resulting in a net outflow of domestic currency.
In macroeconomics, 'stagflation' refers to a period characterized by:
Answer: High inflation combined with stagnant economic growth and high unemployment
Stagflation combines stagnant economic growth, high unemployment, and high inflation — a combination that challenges traditional monetary policy responses.
Which of the following best describes the concept of 'monetary transmission mechanism'?
Answer: The way changes in monetary policy affect economic variables like output and inflation
The monetary transmission mechanism describes the channels through which central bank policy decisions affect broader economic activity and price levels.
Which economic indicator is considered a LEADING indicator of future economic activity?
Answer: Manufacturing new orders
Manufacturing new orders are a leading indicator because they signal future production activity and economic momentum before it appears in other data.
The Gini coefficient is used to measure:
Answer: The distribution of income or wealth inequality within a population
The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality) and quantifies how income or wealth is distributed across a population.