BEC CPA Exam (Correct Answers)
Demand Curve Shift Upward (direct relationship-positive shift)Correct AnswersThe price
of subsitute goods, expectations of price changes, income for normal goods, and extent
of market
Demand Curve Shift Downward (inverse relationship-neg. shift)Correct AnswersThe
price of complement good, income for inferior goods, and consumer boycotts
SWOT analysisCorrect Answersstrengths, weaknesses, opportunities, threats
Three common measures of price inflation:Correct Answers1. The Consumer Price
Index (CP)
2. The Producer Price Index (PPI)
3. The GDP Deflator
Okun's lawCorrect AnswersProvides a general rule of thumb showing how economic
growth rates faster than average often result in reductions in unemployment
Product differentiation strategiesCorrect Answersseek to make the demand for a firm's
products more inelastic.
Transfer pricingCorrect Answersis the process for setting prices that are charged for the
transfer of goods or services between related parties such as departments of a large
entity.
Full employment implies thatCorrect Answersthere frictional and structural
unemployment, but not cyclical unemployment.
The consumer price index (CPI)Correct Answersis a common measure of inflation. It
compares the price of goods and services in a base year to the price of the same goods
and services at a later year. The CPI is commonly used to convert figures not readily
comparable across years into figures that are more comparable.
The phases of the business cycle areCorrect Answersexpansion, peak, contraction (ie,
recession), and trough.
Peaks areCorrect Answersusually characterized by a lack of available labor and capital,
which results in a deceleration of growth. Output is at maximum and unemployment is
as low as possible—or at the "natural" rate.
Tight labor markets and lack of excess capacity often result inCorrect Answersthe
bidding up of wages and prices, leading to an acceleration of inflation.
A change in account balances will always be measured asCorrect Answers(the current
balance - the prior balance), with a positive result indicating an increase and a negative
result a decrease.
% changes for account balances =Correct Answers(Current balance - prior balance) /
prior balance.
Transportation costs would existCorrect Answerseven in the absence of government.
There are three common measures of price inflation:Correct Answersconsumer price
index, producer price index and GDP deflator.
DeflationCorrect Answersa decrease in the general level of prices and inflation rate is
below zero
Collusive pricingCorrect Answersresults when competing suppliers agree that they will
not compete on the basis of price, setting a uniform price to be charged by all suppliers
(conspire). This enables the suppliers to establish higher than market prices.
Price floorCorrect Answersa minimum price for a good or service
, price ceilingCorrect Answersa maximum price that can be legally charged for a good or
service
Structural unemploymentCorrect Answersrepresents a mismatch between the skills of
workers and the needs of the labor market. This usually occurs due to technological
advances that change or eliminate the need for the specific skills many workers
possess.
A significant decline in the U.S. dollar tends toCorrect Answershurt U.S. importers and
benefit U.S. exporters, while making foreign goods more expensive for U.S. consumers.
Stagflation is defined asCorrect Answerssimultaneous unemployment and inflation
Quantitative easingCorrect Answersinvolves the Fed buying securities to add liquidity to
the economy, when short-term interest rates are already close to zero.
GlobalizationCorrect Answershas been ongoing for many decades. It has many
aspects, including more savers having more internationally diversified portfolios (i.e.,
reduced home bias), more firms operating internationally, and increased international
trade occurring within companies.
Impose countervailing duties legally under WTO rules:Correct Answersthe other country
must have disobeyed a WTO panel that told it to correct a problem.
Theory of Derived DemandCorrect Answersthe value of goods of higher order is derived
from that of the corresponding goods of lower order
GDP =Correct AnswersConsumption by households + Investment + Government
spending + Net exports
Opportunity cost is defined asCorrect Answersthe best alternative use or benefit
foregone as the result of a business decision.
Dumping is the practice ofCorrect Answersselling product below its production costs,
generally, in an effort to reduce competition.
Selling foreign reserves causesCorrect Answersone's currency to appreciate, which is
the opposite of what a country with a trade surplus needs if it wants to maintain
exchange rate stability.
The velocity of money (VoM)Correct Answersis used to calculate the number of times
each dollar in the money supply is exchanged to purchase domestically produced goods
and services. VoM is calculated by nominal gross domestic product (NGDP) / the
money supply
Predatory pricing involvesCorrect Answerscompanies attempting to eliminate
competitors by charging prices that are lower than competitors' production costs.
During the second half of the twentieth century, most recessions followed efforts
byCorrect Answersthe Federal Reserve to forestall current or expected increases in
inflation rates through higher interest rates.
Recessionary PhaseCorrect Answersactual national income is less than potential
national income. The economy is typically considered in one following two consecutive
quarters of negative GDP growth.
Primary cause of fluctuations in business activity resulting in the alternating rise and fall
of economic growth isCorrect Answersthe level of total spending
Price Elasticity of Demand =Correct Answers% change in quantity demanded / %
change in price
BylawsCorrect AnswersThe internal rules of management adopted by a corporation at
its first organizational meeting.
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