CFA 2026 Level II Vignettes Economic Analysis Business Cycles Free Quiz 2

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CFA 2026 Level II Vignettes Economic Analysis Business Cycles Free Quiz 2

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CFA 2026 Level II Vignettes Economic Analysis Business Cycles Free Quiz 2

Practice CFA 2026 Level II Vignettes Economic Analysis MCQs from Business Cycles. Get instant results with Explanation.

General10 MCQs

1. Vignette 3: Employment and Inflation - What is the natural rate of unemployment?

A. The unemployment rate in a recessionB. The unemployment rate in an expansionC. The difference between the actual and natural rateD. The structural rate of unemployment around which the actual rate fluctuates

2. What is the Phillips curve?

A. The inverse relationship between inflation and unemployment in the short runB. The inverse relationship between GDP and unemploymentC. The positive relationship between inflation and unemploymentD. The relationship between interest rates and unemployment

3. What is NAIRU?

A. The unemployment rate at which inflation is zeroB. The unemployment rate at which inflation is stable (non-accelerating)C. The unemployment rate at full employmentD. The unemployment rate in a recession

4. What does the long-run Phillips curve look like?

A. The long-run Phillips curve is downward-slopingB. The long-run Phillips curve is upward-slopingC. The long-run Phillips curve is verticalD. The long-run Phillips curve is horizontal

5. How do expectations affect the Phillips curve?

A. Expectations have no effect on the Phillips curveB. Expectations only affect the long-run Phillips curveC. Higher expected inflation shifts the long-run Phillips curveD. Higher expected inflation shifts the short-run Phillips curve upward

General10 MCQs

6. Vignette 4: Monetary Policy and Cycles - What is countercyclical policy?

A. Expansionary during recessions and contractionary during boomsB. Expansionary during booms and contractionary during recessionsC. Always expansionaryD. Always contractionary

7. What are policy lags and why are they important for monetary policy?

A. Monetary policy has no lagsB. Monetary policy effects are immediateC. Monetary policy operates with lags, making timing difficultD. Lags only affect fiscal policy, not monetary policy

8. What is the Taylor rule?

A. The rule that sets the interest rate equal to the inflation rateB. A rule that sets interest rates based on inflation and output gapsC. A rule that keeps interest rates constantD. A rule that targets money supply growth

9. What monetary policy actions are typically taken during a recession?

A. Raise interest rates to fight inflationB. Maintain interest rates unchangedC. Reduce government spendingD. Lower interest rates and use QE if needed

10. What is an output gap?

A. Actual GDP minus nominal GDPB. Potential GDP minus actual GDPC. Actual GDP minus potential GDPD. Nominal GDP minus real GDP

📋 CFA - Test Online Practice Quizzes

CFA

Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 135 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Alternative Investments: 8 MCQs
Corporate Issuers: 7 MCQs
Derivatives: 5 MCQs
Economics: 7 MCQs
Equity Investments: 12 MCQs
Ethics: 16 MCQs
Financial Statement Analysis: 11 MCQs
Fixed Income: 11 MCQs
Portfolio Management: 9 MCQs
Quant Methods: 6 MCQs

Merit Formula: -

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