Economic Concepts III Flashcards
An increase in the value of the Chinese currency (the RMB) relative to the U.S. dollar would most likely cause?
Increased aggregate demand in the U.S
Which statement concerning the business cycle is correct?
A peak occurs at the end of an expansionary period
Which is a correct regarding the Consumer Price Index (CPI) for measuring the estimated decrease in a company’s buying power?
The products a company buys should differ from what a consumer buys
How does inflation distort reported income?
Depreciation is NOT reflective of current fixed-asset replacement costs
Which action would not be taken by the Federal Reserve System to stimulate the economy?
Reduce tax rates
The Federal Reserve System seeks to achieve national economic objectives through its exercise of
monetary policy
Which action is the acknowledged preventive measure for a period of deflation?
Increasing the money supply
What does the Federal Reserve policy achieve by reducing the discount rate?
Increase the money supply
Which would not be an argument made by U.S. unions in favor of trade protectionism?
To increase imports
Which type of exchange risk derives from changes in currency exchange rates that alter the value of future transactions?
Economic exchange risk
Which is not a common basis for establishing a transfer price between affiliated entities?
Costs incurred by the buying affiliate
What is Economic Value Added (EVA)
Economic value-added (EVA) represents the residual income that remains after the cost of all capital, including equity capital, has been deducted.
If a CPA’s client expected a high inflation rate in the future, what type of investment would the CPA suggest to his client?
Precious metals
Which type of risk is inherent in a firm’s operations if it utilizes only equity financing?
Business risk
What is an example of the use of the cloud to create software and programs?
PaaS
