CPA BAR Economics Concepts
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The CPA BAR (Business Analysis and Reporting) section focuses on applying advanced economic concepts to financial management, decision-making, and market analysis. Key areas include capital structure, cost of capital (WACC), capital budgeting techniques (NPV, IRR, Payback), and analyzing economic indicators like interest rates, inflation, and business cycles for forecasting. Key Economics & Business Analysis Concepts in BAR Capital Structure and Cost of Capital: Candidates must calculate and analyze the Weighted Average Cost of Capital (WACC), evaluate financial risk, and determine the... Show more
CPA BAR Economics Concepts
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25 Questions

1. Goods that are considered normal goods:
I. have a negative elasticity of demand
II. will increase in demand as income increases
2. Gross domestic product (GDP) includes:
I. the value of used goods that have been resold
II. foreign-owned factories operating within the United States
3. If the admission price for a basketball game is raised from $25 to $30, causing attendance to drop from 60,000 to 40,000, the price elasticity of the demand for attending the basketball game is:
4. When a good is demanded, no matter what the price, demand is described as:
5. In a typical recession:
I. potential output exceeds actual output
II. real gross domestic product is rising
6. When inflation occurs:
I. purchasing power is reduced
II. those with a fixed obligation are hurt
7. Which of the following is/are correct regarding perfect competition?
I. Customers have no real preference about which firm they buy from.
II. The level of a firm’s output is large relative to the industry’s total output.
8. A firm in which of the following industries would produce products up to a point where marginal cost equals marginal revenue?
I. An industry with monopolistic competition
II. An industry with perfect competition
9. If government expenditures are $12, imports are $4, exports are $7, investments are $30, and consumption is $16, how much is the GDP, assuming all numbers shown are in the billions?
10. Demand for a product tends to be price inelastic if:
I. few good substitutes are available for the product
II. a decline in price results in an increase in total revenue
11. As aggregate demand rises:
I. unemployment decreases
II. real GDP increases
12. Which of the following economic cycles is characterized by a rise in demand for goods, a stabilization of corporate profits, and an increase in economic activity?
13. Real GDP per capita is:
I. the measure often used to compare standards of living across countries
II. calculated by taking real GDP and dividing by population
14. Porter’s five forces affecting a firm’s performance include:
I. intensity of firm rivalry
II. threat of substitute goods
III. threat of new competitors,I and II,I
15. If the US dollar falls in value:
I. net exports will fall
II. supply of foreign goods in the United States would decrease
16. In a supply chain operations reference (SCOR) model, what type of decision is the selection of vendors?
17. The Federal Reserve’s powers include the ability to directly:
I. raise or lower reserve requirements
II. buy or sell government securities
18. Which of the following would remove the effect of inflation as it measures the value of all national output?
I. Real GDP
II. Nominal GDP
19. Using the income approach, calculate GDP for the country of Griffania from the following information:
20. Business profits and employee compensation are used to calculate GDP under which of the following approaches?
I. Expenditures approach
II. Income approach
21. Which of the following actions, if taken by the Federal Reserve, would stimulate the economy and expand the money supply?
I. Reduce the discount rate
II. Increase reserve requirements
III. Purchase government securities
22. Which of the following would be considered expansionary fiscal policy?
I. An increase in taxes
II. A decrease in government spending
23. If demand is price inelastic, an increase in price will:
24. Inflation does NOT:
I. help those on a fixed income
II. increase the price level
25. Which of the following suggests that even if one of two regions is absolutely more efficient in the production of every good than is the other, if each region specializes in the products in which it has greatest relative efficiency, trade will be mutually profitable to both regions?

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