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BEC CPA Exam Review Questions with Detailed
Verified Answers
Demand Curve Shift Upward (direct relationship-positive shift)
Ans: The price of subsitute goods, expectations of price changes, income for normal
goods, and extent of market
Demand Curve Shift Downward (inverse relationship-neg. shift)
Ans: The price of complement good, income for inferior goods, and consumer boycotts
SWOT analysis
Ans: strengths, weaknesses, opportunities, threats
Three common measures of price inflation:
Ans: 1. The Consumer Price Index (CP)
2. The Producer Price Index (PPI)
3. The GDP Deflator
Okun's law
Ans: Provides a general rule of thumb showing how economic growth rates faster than
average often result in reductions in unemployment
Product differentiation strategies
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Ans: seek to make the demand for a firm's products more inelastic.
Transfer pricing
Ans: is 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
Ans: there frictional and structural unemployment, but not cyclical unemployment.
The consumer price index (CPI)
Ans: is 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
Ans: expansion, peak, contraction (ie, recession), and trough.
Peaks are
Ans: usually 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
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Ans: the bidding up of wages and prices, leading to an acceleration of inflation.
A change in account balances will always be measured as
Ans: (the current balance - the prior balance), with a positive result indicating an
increase and a negative result a decrease.
% changes for account balances =
Ans: (Current balance - prior balance) / prior balance.
Transportation costs would exist
Ans: even in the absence of government.
There are three common measures of price inflation:
Ans: consumer price index, producer price index and GDP deflator.
Deflation
Ans: a decrease in the general level of prices and inflation rate is below zero
Collusive pricing
Ans: results 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
© Get it right 2025 Getaway - Stuvia US All rights reserved
BEC CPA Exam Review Questions with Detailed
Verified Answers
Demand Curve Shift Upward (direct relationship-positive shift)
Ans: The price of subsitute goods, expectations of price changes, income for normal
goods, and extent of market
Demand Curve Shift Downward (inverse relationship-neg. shift)
Ans: The price of complement good, income for inferior goods, and consumer boycotts
SWOT analysis
Ans: strengths, weaknesses, opportunities, threats
Three common measures of price inflation:
Ans: 1. The Consumer Price Index (CP)
2. The Producer Price Index (PPI)
3. The GDP Deflator
Okun's law
Ans: Provides a general rule of thumb showing how economic growth rates faster than
average often result in reductions in unemployment
Product differentiation strategies
© Get it right 2025 Getaway - Stuvia US All rights reserved
,Click here for more: Scholars nexus
Ans: seek to make the demand for a firm's products more inelastic.
Transfer pricing
Ans: is 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
Ans: there frictional and structural unemployment, but not cyclical unemployment.
The consumer price index (CPI)
Ans: is 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
Ans: expansion, peak, contraction (ie, recession), and trough.
Peaks are
Ans: usually 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
© Get it right 2025 Getaway - Stuvia US All rights reserved
, Click here for more: Scholars nexus
Ans: the bidding up of wages and prices, leading to an acceleration of inflation.
A change in account balances will always be measured as
Ans: (the current balance - the prior balance), with a positive result indicating an
increase and a negative result a decrease.
% changes for account balances =
Ans: (Current balance - prior balance) / prior balance.
Transportation costs would exist
Ans: even in the absence of government.
There are three common measures of price inflation:
Ans: consumer price index, producer price index and GDP deflator.
Deflation
Ans: a decrease in the general level of prices and inflation rate is below zero
Collusive pricing
Ans: results 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
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