BMC Exam Questions and Answers 2025

Which driver weakened the Swiss franc? (C) - ANSWER a) A surprise change in net export expectations b) A surprise change in interest rates expectations c) A surprise change in inflation expectations d) A surprise change in valuation expectations How accurately do GDP portray the economy and why? - ANSWER Inaccurately because the scope of GDP measurements can change. Consider the formula GDP = C+I+G+(X-M). A country is undergoing a boom in consumption of domestic and foreign luxury goods. In one year, the dollar growth in imports is greater than the dollar growth in domestic consumption. Assuming nothing else has changed, what happened to GDP? - ANSWER It went down Here is the most important economic data for Australia and Sweden. which economy did better year-over-year (YOY) in the fourth quarter of 2013 compared to the fourth quarter of 2012? Use the two charts to investigate. - ANSWER Sweden performed better In the United States, why is there a strong correlation between unemployment and GDP? - ANSWER Consumer spending accounts for two-thirds of the U.S. economy when the number of unemployed consumers rises, there is less consumer spending. Here is a chart showing both nominal GDP growth and real GDP growth for a country. Which of the following can be a true statement at the time the chart was captured? - ANSWER The country has deflation. The bottom line is nominal growth and the top line is real growth. Which of the following lines is the best leading economic indicator? - ANSWER PMI The "misery index" is often cited in the media as a way to measure consumer pain. It is defined as the inflation rate plus the unemployment rate..... - ANSWER Argentina What typically happens to nonfarm payrolls, the PMI indicator, and housing starts at the onset of a recession in the United States? - ANSWER Nonfarm payrolls go down, the PMI indicator goes DOWN, the housing starts goes down. Which of the following qualities of economic indicators do investors prize the most? - ANSWER Timeliness of release Why is the release of GDP statistics less interesting to investors than the release of other economic indicators? - ANSWER Because GDP statistics are released well after other economic indicators. Which of the following important U.S. economic indicators is only available on a quarterly basis? - ANSWER GDP Which economic indicator is most directly linked to unemployment? - ANSWER nonfarm payrolls Here is the economic calendar for the UK for august 2013. Examine indicators like PMI, ... .. - ANSWER Above expectations This chart was captured in mid-2014. At that point in time, which of the following terms..... - ANSWER Deceleration How have economic forecasts for this county evolved? - ANSWER Minimal Change These charts show data for four countries as of early 2016. For each country, the purple line.... - ANSWER Russia What is the main reason that investment banks create estimates of economic indicators? - ANSWER To know when specific economic data points are a positive or negative surprise. Which of the following is the biggest pitfall of economic indicators? - ANSWER They do not consistently presage turning points. Here is a chart displaying estimates of the initial jobless claims indicator, one of the main unemployment.... - ANSWER 260 Which country is the fourth biggest importer and exporter? - ANSWER Japan In 1994, the Mexican peso declined against the US dollar during so-called "Tequila Crisis.".... - ANSWER Both countries had large dollar-denominated debts Using the chart given, how many NZD can you buy with 100 AUD? - ANSWER 107.89 Allison lives in America and has just retired. It is early 2016..... - ANSWER Norway Review the currency pair charts for the Barbadian dollar agains the Jamaican dollar...... - ANSWER Hong Kong dollar against the Macanese pataca Which of the following is not an example of a failed peg? - ANSWER Hong Kong dollar against the U.S. dollar in 1997. Use the cart below to answer the question. How many Danish crown (DKK) will buy 100 (JPY) - ANSWER 5.360 According to the Big Mac index screen, which of the following four countries' currency is the most undervalued? - ANSWER China What generally happens when a central bank unexpectedly increases interest rates? - ANSWER The currency strengthens. Which driver weakened the Swiss franc? - ANSWER A surprise change in inflation expectations What does the Big Mac index show? - ANSWER How currencies may be overvalued or undervalued. Which of the following are short-term drivers of currency valuation? - ANSWER Surprise changes in interest rates, inflation, and trade By what mechanism do interest rates affect currency values? - ANSWER Global investors are attracted by higher bond yields in high interest rate countries. Which of these headlines could move a currency pair? - ANSWER U.S. Stocks rally on Fed's Surprise reduction of Interest Rate. What is the most common target inflation rate for an advanced economy? - ANSWER 2% What was the primary goal of Abenomics? - ANSWER To halt the vicious cycle of deflation Here is the vicious deflationary cycle. What step connects the lower left gray arrow to the upper right blue arrow? - ANSWER prices decline Were the two oil crises in the 1970s linked to deflation or inflation? - ANSWER Inflation on June 23. 2016, the UK voted to leave the EU..... - ANSWER They are probably heavy exporters In early 2016, the same Germany machinery company has interest from four prospective clients..... - ANSWER Indonesia What is the median estimate for the number of Japanese yen per euro for calendar year 2020? - ANSWER 126 What is the difference between Norma and RBC's estimate for the Japanese yen/euro... - ANSWER 40 yen Imagine you are a Dutch diamond dealer who sources diamonds from south africa - ANSWER EUR 4,717 more Why would Jack Welch suggest putting all company plants on barges? - ANSWER To respond quickly to changes in the currency markets. Samsung is based in South Korea and reports in South Korean won.... - ANSWER Dollar Legendary investor Warren Buffett said, "Gold gets dug out of the ground Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head." Based on this quotation, what quality of gold is he referring to? - ANSWER Its storage costs Which of the following options is the best way for investors to manage currency risk? - ANSWER By locking in forward rates for known foreign payments. What does the Big Mac index show? (A) - ANSWER a) How currencies may be overvalued or undervalued b) How the Economist magazine estimates inflation c) How the law of one price is true of consumer products d) How interest rates and inflation affect value Which of the following are short-term drivers of currency valuation? (A) - ANSWER a) Surprise charges in interest rates, inflation, and trade b) Surprise changes in interest rates, inflation, and gold c) Surprise changes in relative prices, trade, and gold d) Surprise changes in relative prices, inflation, and trade By what mechanism do interest rates affect currency values? (C) - ANSWER a)High interest rates slow an economy and make it less attractive to investors b) Changes in interest rates directly influence the value at which a currency is pegged c) Global investors are attracted by higher bond yields in high interest rate countries d) High interest rates make the currency safer According to the Big Mac index screen, which of the following four countries' currency is the most undervalued? (D) - ANSWER a)United States b)Thailand c)Brazil d)China What generally happens when a central bank unexpectedly increases interest rates? (D) - ANSWER a)The currency weakens, then strengthens. b) The currency strengthens, then weakens. c) The currency weakens d) The currency strengthens What is the most common target inflation rate for an advanced economy? (C) - ANSWER a) 3% b) 1% c) 2% d) 0% What is the median estimate for the number of Japanese yen per euro for Calendar year 2020? (D) - ANSWER a)115 b)163 c)132 d)126 What is the primary goal of Abenomics? (B) - ANSWER a)To strengthen the yen to foster consumption of luxury goods b) To halt the vicious cycle of deflation c) To reduce inflation by increasing unemployment d) To reign in GDP by reducing business confidence Here is the vicious deflationary cycle. What step connects the lower left gray arrow to the upper right blue arrow? (B) - ANSWER a)Workers demand pay increases b) Prices decline c) Employment declines d) Workers expect prices to increase Were the two oil crises in the 1970s linked to deflation or inflation? (C) - ANSWER a)Deflation b)Both deflation and inflation c)Inflation d)Neither deflation nor inflation On June 23, 2016, the United Kingdom voted to leave the European Union ...... (D) - ANSWER a)They are probably heavy importers b) Their CEOs probably voted to leave the EU c) Their CEOs probably voted to remaining the EU d) They are probably heavy exporters In the early 2016, the same Germany machinery company has interest from four prospective clients from emerging markets: Indonesia, Brazil, Russia, and South Africa (C) - ANSWER a)South Africa b)Russia c)Indonesia d)Brazil What is the difference between Nomura and RBC's estimate for the Japanese yen/euro currency pair for the end of Q1 2018? (D) - ANSWER a)40 percent b) 40 dollars