Sample questions from BEC section of the book.
II. ECONOMIC CONCEPTS ESSENTIAL TO OBTAINING AN UNDERSTANDING OF AN ENTITYÂ’S BUSINESS AND INDUSTRY (8%-12%)
BUSINESS CYCLES AND REASONS FOR BUSINESS FLUCTUATIONS
ECONOMIC MEASURES AND REASONS FOR CHANGES IN THE ECONOMY, SUCH AS INFLATION, DEFLATION AND INTEREST RATE CHANGES
MARKET INFLUENCES ON BUSINESS STRATEGIES, INCLUDING SELLING, SUPPLY CHAIN, AND CUSTOMER MANAGEMENT STRATEGIES
IMPLICATIONS TO BUSINESS OF DEALINGS IN FOREIGN CURRENCIES, HEDGING AND EXCHANGE RATE FLUCTUATIONS
1. The business cycle refers to the continual ebb and flow of economic activity. No two cycles are exactly the same, but most are characterized by changes in the price level and the rate of employment and can be identified by common factors. During the recessionary phase of a business cycle,
a. The purchasing power of money is likely to decline rapidly.
b. Potential national income will exceed actual national income.
c. Actual national income will exceed potential national income.
d. The real rate of interest will exceed the nominal rate of interest.
2. If the central bank of a country raises interest rates sharply, the countryÂ’s currency will MOST likely
a. Increase in relative value.
b. Remain unchanged in value.
c. Decrease in relative value.
d. Lose much of its intrinsic value.
