BEC CPA Exam Review 2025 Comprehensive Study Guide with Practice Questions &
Answers
Demand |Curve |Shift |Upward |(direct |relationship-positive |shift) |- |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) |- |answersThe |price |of |complement |
good, |income |for |inferior |goods, |and |consumer |boycotts
SWOT |analysis |- |answersstrengths, |weaknesses, |opportunities, |threats
Three |common |measures |of |price |inflation: |- |answers1. |The |Consumer |Price |Index |(CP)
2. |The |Producer |Price |Index |(PPI)
3. |The |GDP |Deflator
Okun's |law |- |answersProvides |a |general |rule |of |thumb |showing |how |economic |growth |rates |faster |
than |average |often |result |in |reductions |in |unemployment
Product |differentiation |strategies |- |answersseek |to |make |the |demand |for |a |firm's |products |more |
inelastic.
Transfer |pricing |- |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 |that |- |answersthere |frictional |and |structural |unemployment, |but |not |cyclical |
unemployment.
The |consumer |price |index |(CPI) |- |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 |are |- |answersexpansion, |peak, |contraction |(ie, |recession), |and |
trough.
Peaks |are |- |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 |in |- |answersthe |bidding |up |of |wages |and |
prices, |leading |to |an |acceleration |of |inflation.
A |change |in |account |balances |will |always |be |measured |as |- |answers(the |current |balance |- |the |prior |
balance), |with |a |positive |result |indicating |an |increase |and |a |negative |result |a |decrease.
% |changes |for |account |balances |= |- |answers(Current |balance |- |prior |balance) |/ |prior |balance.
, Transportation |costs |would |exist |- |answerseven |in |the |absence |of |government.
There |are |three |common |measures |of |price |inflation: |- |answersconsumer |price |index, |producer |price |
index |and |GDP |deflator.
Deflation |- |answersa |decrease |in |the |general |level |of |prices |and |inflation |rate |is |below |zero
Collusive |pricing |- |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 |floor |- |answersa |minimum |price |for |a |good |or |service
price |ceiling |- |answersa |maximum |price |that |can |be |legally |charged |for |a |good |or |service
Structural |unemployment |- |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 |to |- |answershurt |U.S. |importers |and |benefit |U.S. |
exporters, |while |making |foreign |goods |more |expensive |for |U.S. |consumers.
Stagflation |is |defined |as |- |answerssimultaneous |unemployment |and |inflation
Quantitative |easing |- |answersinvolves |the |Fed |buying |securities |to |add |liquidity |to |the |economy, |
when |short-term |interest |rates |are |already |close |to |zero.
Globalization |- |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: |- |answersthe |other |country |must |have |
disobeyed |a |WTO |panel |that |told |it |to |correct |a |problem.
Theory |of |Derived |Demand |- |answersthe |value |of |goods |of |higher |order |is |derived |from |that |of |the |
corresponding |goods |of |lower |order
GDP |= |- |answersConsumption |by |households |+ |Investment |+ |Government |spending |+ |Net |exports
Opportunity |cost |is |defined |as |- |answersthe |best |alternative |use |or |benefit |foregone |as |the |result |of |a
|business |decision.
Dumping |is |the |practice |of |- |answersselling |product |below |its |production |costs, |generally, |in |an |effort |
to |reduce |competition.
Selling |foreign |reserves |causes |- |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) |- |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
Answers
Demand |Curve |Shift |Upward |(direct |relationship-positive |shift) |- |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) |- |answersThe |price |of |complement |
good, |income |for |inferior |goods, |and |consumer |boycotts
SWOT |analysis |- |answersstrengths, |weaknesses, |opportunities, |threats
Three |common |measures |of |price |inflation: |- |answers1. |The |Consumer |Price |Index |(CP)
2. |The |Producer |Price |Index |(PPI)
3. |The |GDP |Deflator
Okun's |law |- |answersProvides |a |general |rule |of |thumb |showing |how |economic |growth |rates |faster |
than |average |often |result |in |reductions |in |unemployment
Product |differentiation |strategies |- |answersseek |to |make |the |demand |for |a |firm's |products |more |
inelastic.
Transfer |pricing |- |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 |that |- |answersthere |frictional |and |structural |unemployment, |but |not |cyclical |
unemployment.
The |consumer |price |index |(CPI) |- |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 |are |- |answersexpansion, |peak, |contraction |(ie, |recession), |and |
trough.
Peaks |are |- |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 |in |- |answersthe |bidding |up |of |wages |and |
prices, |leading |to |an |acceleration |of |inflation.
A |change |in |account |balances |will |always |be |measured |as |- |answers(the |current |balance |- |the |prior |
balance), |with |a |positive |result |indicating |an |increase |and |a |negative |result |a |decrease.
% |changes |for |account |balances |= |- |answers(Current |balance |- |prior |balance) |/ |prior |balance.
, Transportation |costs |would |exist |- |answerseven |in |the |absence |of |government.
There |are |three |common |measures |of |price |inflation: |- |answersconsumer |price |index, |producer |price |
index |and |GDP |deflator.
Deflation |- |answersa |decrease |in |the |general |level |of |prices |and |inflation |rate |is |below |zero
Collusive |pricing |- |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 |floor |- |answersa |minimum |price |for |a |good |or |service
price |ceiling |- |answersa |maximum |price |that |can |be |legally |charged |for |a |good |or |service
Structural |unemployment |- |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 |to |- |answershurt |U.S. |importers |and |benefit |U.S. |
exporters, |while |making |foreign |goods |more |expensive |for |U.S. |consumers.
Stagflation |is |defined |as |- |answerssimultaneous |unemployment |and |inflation
Quantitative |easing |- |answersinvolves |the |Fed |buying |securities |to |add |liquidity |to |the |economy, |
when |short-term |interest |rates |are |already |close |to |zero.
Globalization |- |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: |- |answersthe |other |country |must |have |
disobeyed |a |WTO |panel |that |told |it |to |correct |a |problem.
Theory |of |Derived |Demand |- |answersthe |value |of |goods |of |higher |order |is |derived |from |that |of |the |
corresponding |goods |of |lower |order
GDP |= |- |answersConsumption |by |households |+ |Investment |+ |Government |spending |+ |Net |exports
Opportunity |cost |is |defined |as |- |answersthe |best |alternative |use |or |benefit |foregone |as |the |result |of |a
|business |decision.
Dumping |is |the |practice |of |- |answersselling |product |below |its |production |costs, |generally, |in |an |effort |
to |reduce |competition.
Selling |foreign |reserves |causes |- |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) |- |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
