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Free Questions › CFA › Economics
Free CFA Economics Practice Questions & Answers
2,050 exam-style Economics questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 451
During a boom, companies may:
Select an option first.
Correct answer: C — Struggle to find workers
Explanation: ✔ Why correct: Labor shortages occur in booms.
Question 452
During a boom, central banks may:
Select an option first.
Correct answer: D — Intervene to prevent overheating
Explanation: ✔ Why correct: Authorities tighten policy to cool the economy.
Question 453
During slowdown, risky assets:
Select an option first.
Correct answer: B — Often decline
Explanation: ✔ Why correct: Risky assets fall after booming.
Question 454
During slowdown, government bond yields:
Select an option first.
Correct answer: D — Rise
Explanation: ✔ Why correct: Bond prices fall and yields rise due to inflation fears.
Question 455
Business cycles do NOT occur in:
Select an option first.
Correct answer: D — Centrally planned economies
Explanation: ✔ Why correct: Centrally planned economies lack typical cycles.
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Question 456
Business cycles vary in:
Select an option first.
Correct answer: C — Both duration and intensity
Explanation: ✔ Why correct: Cycles differ in both length and strength.
Question 457
The recovery phase begins at the:
Select an option first.
Correct answer: D — Trough
Explanation: ✔ Why correct: Recovery starts at the lowest point.
Question 458
During recovery, unemployment:
Select an option first.
Correct answer: D — Remains high but stabilizes
Explanation: ✔ Why correct: Hiring lags behind output recovery.
Question 459
During expansion, unemployment:
Select an option first.
Correct answer: B — Falls
Explanation: ✔ Why correct: Firms hire more as demand rises.
Question 460
During slowdown, unemployment:
Select an option first.
Correct answer: D — Falls but more slowly
Explanation: ✔ Why correct: Hiring slows, so unemployment falls more slowly.
Question 461
During contraction, unemployment:
Select an option first.
Correct answer: C — Rises
Explanation: ✔ Why correct: Firms cut hours and lay off workers.
Question 462
During contraction, consumer confidence:
Select an option first.
Correct answer: B — Falls
Explanation: ✔ Why correct: Consumers become pessimistic.
Question 463
Business cycles affect:
Select an option first.
Correct answer: C — Broad segments of the economy
Explanation: ✔ Why correct: Cycles impact many sectors simultaneously.
Question 464
Business cycles are typical in:
Select an option first.
Correct answer: C — Market-based economies
Explanation: ✔ Why correct: Market economies exhibit cyclical behavior.
Question 465
The classical cycle is less used because:
Select an option first.
Correct answer: C — It does not separate trend from cycle
Explanation: ✔ Why correct: It cannot easily distinguish long-run trends.
Question 466
Growth cycles show:
Select an option first.
Correct answer: B — Deviations from trend output
Explanation: ✔ Why correct: Growth cycles measure gaps from trend.
Question 467
Growth rate cycles identify:
Select an option first.
Correct answer: A — Turning points earlier
Explanation: ✔ Why correct: Growth rate cycles detect peaks/troughs earlier.
Question 468
In recovery, activity levels:
Select an option first.
Correct answer: C — Are below potential but rising
Explanation: ✔ Why correct: Recovery lifts activity from low levels.
Question 469
In expansion, activity levels:
Select an option first.
Correct answer: B — Show above-average growth
Explanation: ✔ Why correct: Expansion features strong growth.
Question 470
In slowdown, activity levels:
Select an option first.
Correct answer: B — Are above average but decelerating
Explanation: ✔ Why correct: Growth slows but remains above average initially.
Question 471
In contraction, activity levels:
Select an option first.
Correct answer: B — Are below potential
Explanation: ✔ Why correct: Contraction pushes output below potential.
Question 472
In recovery, inflation:
Select an option first.
Correct answer: B — Is moderate
Explanation: ✔ Why correct: Inflation is moderate early in recovery.
Question 473
In expansion, inflation:
Select an option first.
Correct answer: B — Picks up modestly
Explanation: ✔ Why correct: Demand pressures raise inflation.
Question 474
In slowdown, inflation:
Select an option first.
Correct answer: B — Decelerates
Explanation: ✔ Why correct: Inflation slows as growth cools.
Question 475
In contraction, inflation:
Select an option first.
Correct answer: B — Decelerates with a lag
Explanation: ✔ Why correct: Prices adjust slowly downward.
Question 476
Equity markets are:
Select an option first.
Correct answer: C — Leading indicators
Explanation: ✔ Why correct: Equity markets anticipate economic turning points.
Question 477
Risky assets rise when:
Select an option first.
Correct answer: B — Expansion is expected
Explanation: ✔ Why correct: Markets price in higher future profits.
Question 478
During boom, wages:
Select an option first.
Correct answer: C — Rise due to labor shortages
Explanation: ✔ Why correct: Firms compete for scarce labor.
Question 479
During boom, capacity:
Select an option first.
Correct answer: B — Expands aggressively
Explanation: ✔ Why correct: Firms expand capacity during booms.
Question 480
During slowdown, safe assets:
Select an option first.
Correct answer: A — Rise in price
Explanation: ✔ Why correct: Investors shift to safety.
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