QUESTION: 1469

"An erratic monetary policy is the primary sources of business instability and inflation." This view is held by

Monetarists.
Keynesians.
Classical economists.
Neoclassical economists.

Answer(s): A

Explanation:

Monetarists believe that monetary policy has a powerful influence on the economy but also realize that there are lengthy and unpredictable time lags between the implementation of a monetary policy and the realization of its primary effects. Hence, an erratic monetary policy can lead to big instabilities in the economy.

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QUESTION: 1470

How will an unanticipated increase in aggregate demand emanating from an increase in business and consumer optimism influence equilibrium output in the goods and services market?

Output will decrease and prices rise.
Output will decrease and prices fall.
Output will increase and prices rise.
Output will increase and prices decline.

Answer(s): C

Explanation:

Optimism concerning the future direction of the economy will stimulate investment. Investment today may be necessary in order to benefit fully from future opportunities. This will cause aggregate demand to rise; in response, output will rise as will prices (due to increased competition for output and resources).

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QUESTION: 1471

Cash outflows for payment of cash dividends is an example of:

cash flows from operating activities
cash flows from financing activities
cash flows from noncash investing and financing activities
cash flows from investing activities

Answer(s): C

Explanation:

Providing stockholders with a return on their investment in the form of a cash dividend is a financing activity.

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QUESTION: 1472

Basic earnings per share is calculated as:

[Net Income- Dividends]/Weighted Avg # of shares outstanding.
[Net Income-Preferred Dividends]/Weighted Avg # of common shares outstanding.
[Net Income]/[Common shares outstanding]
[Net Income-Preferred Dividends]/[Weighted Avg # of common shares outstanding] - EPS impact of diluted convertibles.

Answer(s): B

Explanation:

The basis EPS formula aims to derive earnings per share of common stock for the amount of the year that the common shares were outstanding. It is for this reason that preferred dividends are not included and the weighted average number of common shares outstanding are used in the denominator.

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Free CFA-Level-I Exam Braindumps (page: 368)

QUESTION: 1469

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QUESTION: 1470

Explanation:

QUESTION: 1471

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QUESTION: 1472

Explanation: