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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 961
Institutions can be:
Select an option first.
Correct answer: B — Formal or informal structures shaping society
Explanation: ✔ Why correct: Institutions include laws, customs, NGOs, and more. Wrong: A, C, D: Too narrow.
Question 962
Strong institutions contribute to:
Select an option first.
Correct answer: B — More durable cooperative relationships
Explanation: ✔ Why correct: Strong institutions support stability and long-term cooperation. Wrong: A, C, D: Opposite effects.
Question 963
Countries with strong institutions can act with more authority internationally because:
Select an option first.
Correct answer: B — They have accountability, rule of law, and property rights
Explanation: ✔ Why correct: Strong institutions enhance credibility and stability. Wrong: A, C, D: Not true.
Question 964
Strong institutions reduce the likelihood of defection from cooperation because:
Select an option first.
Correct answer: B — They embed cooperation across multiple layers of society
Explanation: ✔ Why correct: Broad institutional support makes cooperation more resilient. Wrong: A, C, D: Not accurate.
Question 965
A country’s political cooperation is influenced by:
Select an option first.
Correct answer: B — Economic, security, social, and cultural factors
Explanation: ✔ Why correct: Cooperation reflects a wide mix of national interests and pressures. Wrong: A, C, D: Too narrow.
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Question 966
The international environment is constantly evolving due to factors such as:
Select an option first.
Correct answer: B — Growth of emerging markets, globalization, and populism
Explanation: ✔ Why correct: These major global trends reshape opportunities and risks for countries and firms. ✘ Why others wrong: A: Trade has grown overall. C: Political interaction has increased. D: Geopolitical risk persists.
Question 967
Geopolitics studies:
Select an option first.
Correct answer: B — How geography influences politics and international relations
Explanation: ✔ Why correct: Geography shapes political and economic interactions among nations. Wrong: A, C, D: Not definitions of geopolitics.
Question 968
A country’s relationship with another may change if:
Select an option first.
Correct answer: B — An ally of one country is attacked by the other
Explanation: ✔ Why correct: Actions toward allies affect diplomatic ties. Wrong: A, C, D: Not necessarily relationship-changing.
Question 969
Political cooperation refers to:
Select an option first.
Correct answer: B — Countries aligning rules, standards, and agreements
Explanation: ✔ Why correct: Cooperation involves harmonizing rules and enabling cross-border flows. Wrong: A, C, D: Opposite of cooperation.
Question 970
A non-cooperative country typically:
Select an option first.
Correct answer: B — Restricts movement of goods, services, and people
Explanation: ✔ Why correct: Non-cooperative states impose barriers and inconsistent rules. Wrong: A, C, D: Cooperative behaviors.
Question 971
Geophysical resource endowment includes:
Select an option first.
Correct answer: B — Geography, climate, food, and water access
Explanation: ✔ Why correct: These natural factors determine a country’s basic resource base. Wrong: A, C, D: Not resource endowment.
Question 972
Resource-rich countries may gain political leverage because:
Select an option first.
Correct answer: B — Other countries depend on their resources
Explanation: ✔ Why correct: Resource dependence creates bargaining power. Wrong: A, C, D: Not accurate.
Question 973
Standardization supports global economic activity by:
Select an option first.
Correct answer: B — Reducing costs and delays in cross-border transactions
Explanation: ✔ Why correct: Shared standards streamline trade and financial operations. Wrong: A, C, D: Opposite effects.
Question 974
SWIFT is an example of:
Select an option first.
Correct answer: B — Process standardization in financial messaging
Explanation: ✔ Why correct: SWIFT standardizes global financial communication. Wrong: A, C, D: Not related.
Question 975
Containerization is an example of:
Select an option first.
Correct answer: B — Operational synchronization in global shipping
Explanation: ✔ Why correct: Standardized containers synchronize logistics across transport modes. Wrong: A, C, D: Not correct.
Question 976
Soft power involves:
Select an option first.
Correct answer: C — Influencing others through culture and attraction
Explanation: ✔ Why correct: Soft power relies on persuasion and cultural appeal. Wrong: A, B, D: Hard power tools.
Question 977
Strong institutions contribute to:
Select an option first.
Correct answer: B — Durable cooperative relationships
Explanation: ✔ Why correct: Strong institutions support accountability and stable cooperation. Wrong: A, C, D: Opposite effects.
Question 978
Countries with strong institutions act more effectively internationally because:
Select an option first.
Correct answer: B — They have rule of law, accountability, and property rights
Explanation: ✔ Why correct: Strong institutions enhance credibility and stability in global affairs. Wrong: A, C, D: Not true.
Question 979
Comparative advantage arises because countries differ in:
Select an option first.
Correct answer: B — Resource endowments and technological capabilities
Explanation: ✔ Why correct: Comparative advantage is based on differing factors and technologies. ✘ Why others wrong: A, C, D: Not the core drivers.
Question 980
Ghana’s economy illustrates comparative advantage because it:
Select an option first.
Correct answer: B — Has resources but relies on others for processing
Explanation: ✔ Why correct: Ghana exports raw resources but depends on others for processing. ✘ Why others wrong: A, C, D: Incorrect.
Question 981
Specialization and exchange lead to:
Select an option first.
Correct answer: B — Greater economies of scale
Explanation: ✔ Why correct: Specialization increases scale and efficiency. Wrong: A, C, D: Opposite.
Question 982
Geopolitical risk can tilt comparative advantage by:
Select an option first.
Correct answer: B — Attracting or repelling labor and capital
Explanation: ✔ Why correct: Low-risk regions attract investment; high-risk regions lose it. Wrong: A, C, D: Not mechanisms.
Question 983
Higher geopolitical risk generally leads investors to:
Select an option first.
Correct answer: A — Require higher returns
Explanation: ✔ Why correct: More risk requires higher compensation. Wrong: B, C, D: Not rational.
Question 984
Investors who are “takers” of geopolitical risk:
Select an option first.
Correct answer: B — Consider geopolitics only when it affects long-term attractiveness
Explanation: ✔ Why correct: They incorporate geopolitics only when relevant to long-term views. Wrong: A, C, D: Not accurate.
Question 985
Investors who treat geopolitics as a core input:
Select an option first.
Correct answer: B — Use geopolitical analysis to generate alpha
Explanation: ✔ Why correct: They actively monitor geopolitical dislocations for opportunities. Wrong: A, C, D: Opposite.
Question 986
Event risk is defined as:
Select an option first.
Correct answer: B — A risk tied to a known date
Explanation: ✔ Why correct: Event risks revolve around scheduled events like elections. Wrong: A, C, D: Other categories.
Question 987
Brexit was an example of:
Select an option first.
Correct answer: A — Event risk
Explanation: ✔ Why correct: The referendum date was known in advance. Wrong: B, C, D: Not correct.
Question 988
Predictability of an event:
Select an option first.
Correct answer: B — Does not change its speed or size of impact
Explanation: ✔ Why correct: Known events can still have large, fast impacts. Wrong: A, C, D: False.
Question 989
Exogenous risk refers to:
Select an option first.
Correct answer: B — Sudden, unanticipated shocks
Explanation: ✔ Why correct: Exogenous risks include uprisings, invasions, disasters. Wrong: A, C, D: Not exogenous.
Question 990
The 2011 Japan earthquake was an example of:
Select an option first.
Correct answer: B — Exogenous risk
Explanation: ✔ Why correct: It was sudden and unpredictable. Wrong: A, C, D: Incorrect.
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