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b2 Questions

b2 Questions

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Published by: joseph_lacon on Apr 04, 2012
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08/10/2013

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Becker CPA Review, PassMaster QuestionsLecture: Business 2
1
© 2009 DeVry/Becker Educational Development Corp. All rights reserved.
CPA PassMaster Questions–Business 2Export Date: 10/30/08
Page 1of 10
 
Becker CPA Review, PassMaster QuestionsLecture: Business 2
2
© 2009 DeVry/Becker Educational Development Corp. All rights reserved.
Business Cycles and Reasons for Business FluctuationsCPA-03218Type1 M/C A-D Corr Ans: C PM#1 B 2-01
1. CPA-03218 1B.C02 -11 Page 8 An increase (shift right) in aggregate demand causes:a. An increase in the price level and a decrease in real GDP.b. A decrease in the price level and an increase in real GDP.c. An increase in the price level and an increase in real GDP.d. A decrease in the price level and a decrease in real GDP.
CPA-03218 Explanation
Choice "c" is correct. As shown above, an increase in aggregate demand causes the equilibrium pricelevel to rise and equilibrium output (real GDP) to increase.Choice "a" is incorrect. As shown above, equilibrium output increases, not decreases.Choice "b" is incorrect. As shown above, the equilibrium price level increases, not decreases.Choice "d" is incorrect. As shown above, the equilibrium price level increases, not decreases.
CPA-03221Type1 M/C A-D Corr Ans: C PM#2 B 2-01
2. CPA-03221 J93 -1.03 (Adapted) Page 3The trough of a business cycle is generally characterized by:a. Shortages of essential raw materials and rising costs.b. Increasing purchasing power and increasing capital investments.c. Unused productive capacity and an unwillingness to risk investments.d. Declining purchasing power and unused productive capacity.
CPA-03221 Explanation
Choice "c" is correct. The trough of a business cycle is an economic low point with no positive indicatorsfor the future. It is characterized by unused productive capacity and an unwillingness to risk newinvestments.Choice "a" is incorrect. Shortages may occur during a peak.Choice "b" is incorrect. Increasing purchasing power and increasing capital investments come withrecovery.Choice "d" is incorrect. Declining purchasing power comes with inflation; unlikely in a trough.
Page 2of 10
 
Becker CPA Review, PassMaster QuestionsLecture: Business 2
3
© 2009 DeVry/Becker Educational Development Corp. All rights reserved.
CPA-03227Type1 M/C A-D Corr Ans: C PM#3 B 2-01
3. CPA-03227 BEC C04 #1 Page 5During a recession:a. Output (real GDP) will be increasing.b. The natural rate of unemployment will increase dramatically.c. Potential output will exceed actual output.d. Actualoutput ill exceed potential output.
CPA-03227 Explanation
Choice "c" is correct. During a recession, potential output (real GDP) will exceed actual output (realGDP).Choice "a" is incorrect. Real GDP is falling during a recession.Choice "b" is incorrect. The natural rate of unemployment will not be affected by the various phases of the business cycle. Actual unemployment will change with the cycle.Choice "d" is incorrect. Actual output will not exceed potential output except at the peak of the cycle, andperhaps not then.
CPA-03233 Type1 M/C A-D Corr Ans: D PM#4 B 2-01
4. CPA-03233 1B.C02 -14 Page 8 A recession can be caused by:a. An increase in aggregate demand.b. A decrease in aggregate supply.c. A decrease in aggregate demand.d. Both "b" and "c".
CPA-03233 Explanation
Choice "d" is correct. Both choices "b" and "c" can cause a recession. A recession is defined as a periodof falling GDP and rising unemployment. GDP will fall if there is a decrease in aggregate demand or adecrease in aggregate supply.Choice "a" is incorrect. An increase in aggregate demand will cause GDP to increase NOT decrease.Choice "b" is incorrect, per the above explanation.Choice "c" is incorrect, per the above explanation.
CPA-03246Type1 M/C A-D Corr Ans: C PM#5 B 2-01
5. CPA-03246 1B.C02 -20 Page 3 A period during which real GDP is rising and unemployment is falling is called a(n):a. Recession.b. Peak.c. Expansion.d. Trough.
CPA-03246 Explanation
Choice "c" is correct. During an expansion, real GDP is rising and unemployment is falling.Choice "a" is incorrect. A recession is when real GDP is falling NOT rising.
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