Series 65 – Uniform Investment Adviser Law Exam Economic Factors and Business Information

Question 1

Which economic indicator is considered a leading indicator of future economic activity?

Accepted Answer

Building permits

Answer

Building permits are a leading indicator because they signal future construction and economic expansion before it occurs.

Question 2

When the Federal Reserve raises the federal funds rate, what is the typical effect on bond prices?

Accepted Answer

Bond prices fall

Answer

When interest rates rise, existing bond prices fall because new bonds offer higher yields, making older bonds less attractive.

Question 3

Which phase of the business cycle is characterized by rising GDP, falling unemployment, and increasing consumer spending?

Accepted Answer

Expansion

Answer

The expansion phase features rising economic output, decreasing unemployment, and increased consumer and business spending.

Question 4

What does a yield curve inversion typically signal?

Accepted Answer

A potential recession

Answer

An inverted yield curve, where short-term rates exceed long-term rates, has historically been a reliable predictor of recession.

Question 5

Which of the following best describes the Consumer Price Index (CPI)?

Accepted Answer

A measure of changes in the price of a basket of consumer goods and services

Answer

The CPI tracks the average change over time in the prices paid by urban consumers for a representative basket of goods and services.

Series 65 – Uniform Investment Adviser Law Exam Practice Test