Economics
Covers micro and macroeconomic concepts and their application in finance.
Concepts covered: Economics of Regulation, Currency Exchange Rates, International Trade and Capital Flows, Microeconomics, Macroeconomics
CFA Level 1 - Economics Example Questions
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Question 1
A government is considering implementing price controls on a particular industry to protect consumers from high prices. The industry argues that such regulation would stifle innovation and lead to shortages. Proponents of the regulation argue that it is necessary to ensure fair prices for consumers. Which of the following is the most likely outcome if the price controls are implemented?
Question 2
XYZ Company, a leading smartphone manufacturer, has been experiencing a decline in sales due to increased competition and market saturation. The company's management is considering two options to boost profitability: (1) investing in research and development to create innovative features for their smartphones, or (2) reducing production costs by outsourcing components to lower-cost suppliers. The company's goal is to maximize long-term profitability while maintaining its brand reputation for high-quality products. Which of the following would be the most appropriate strategy for XYZ Company?
Question 3
Which of the following is a potential consequence of asymmetric information between regulators and regulated firms?
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