Economic Fundamentals
Exercise:
1. There are three basic concepts of economics EXCEPT?
A. Household expenses
B. Supply & demand
C. Scarcity
D. Opportunity cost. 

2. In order to induce producers to supply more of a commodity, a higher commodity price must be paid because producers usually face:
A. decreasing production costs
B. economies of scale
C. increasing production costs
D. specialisation and division of labour in production

3. Which of the following is NOT part of the government sector to the economy?
A. Federal government
B. State government
C. Firms
D. Municipal government

4. Financial market participants are generally concerned with economic factors such as:
I.   Interpreting the regular releases of economic data
II.  Forecasting short to long-term trends for the investment decision-making
III. Assessing the impact of policy changes and decisions
Iv. Managing risks versus returns in financial market

A. I and II only
B. III and IV only
C. I, II, and III only
D. All of the above

The Real Economy
Exercise:
1. GNP is the market value of
A. all transactions in an economy during a 1-year period
B. all goods and services exchanged in an economy during a 1-year period.
C. all final goods and services exchanged in an economy during a 1-year period.
D. all final goods and services produced in an economy during a 1-year period.

2. Which of the following is NOT an indicator used to denote inflation?
A. Money supply
B. Producer/Wholesale price index
C. GDP deflator
D. Retail price index

3. Which of the following will have an adverse impact on share prices?
A. High economic growth
B. Lower interest rate due to easy monetary policy
C. High inflation
D. Higher money supply

4. In a simple cost-push model, an increase in the price of output will:
A. Increase prices and output
B. Increase prices and reduce output
C. Increase prices with no impact on output
D. have no effect

The Public Sector
Exercise:
1. An increase in government spending shifts the aggregate demand schedule:
A. upward by the increase in government spending.
B. downward by the increase in government spending
C. upward by the increase in government spending times the expenditure multiplier
D. downward by the increase in government spending times the expenditure multiplier

2. The public debit imposes a burden on future generation if:
A. the government balance the budget over the business cycle
B. it is completely owned to the citizen of the issuing country
C. it is largely owned to foreigners
D. taxes do not have to be increased in the future to cover higher interest payments on the debt

Monetary Policy
Exercise:
1. What is the principal aim of monetary policy in Malaysia?
A. Maintain price stability and stabilising economic growth
B. Maintain a sound and stable financial system
C. Create a deep and efficient financial markets
D. Equitable income distribution

2. Which of the following does NOT constitute a toughening of monetary policy?
A. Increasing SRR
B. Reducing intervention rate
C. Limiting credit growth to only 5% annually.
D. Higher EPF deposits at BNM

International Sector
Exercise:
1. Malaysia is a nation which is:
A. a closed economy
B. an open economy
C. a self-sufficient economy
D. a non-trading nation

2. Which one of the following is NOT included in the current account of the balance of payments?
A. Exports of goods and services
B. Transfers
C. External debt inflow
D. interest payments

3. A deficit of a surplus in the balance of payments is measured by the balances recorded in the;
A. current account
B. basic balance and short-term capital
C. basic balance, short-term capital and errors and omissions
D. current and capital account

4. The rate of exchange between the domestic and foreign currency is defined as the:
A. foreign price of a unit of the domestic currency
B. domestic currency price of a unit of the foreign currency
C. foreign currency price of gold
D. domestic currency price of gold

5. Under the freely flexibility exchange rate system, a deficit in the balance of payments is corrected by:
A. a decline in the domestic currency price of the foreign currency
B. an appreciation of the domestic currency
C. a depreciation of the domestic currency
D. a depreciation of the foreign currency

International Economic
Exercise:
1. Which of the following is NOT a risk globalisation?
A. Financial instability
B. Integration of markets
C. Increase risk-taking by financial institutions
D. Pressures on international payment and settlement systems

2. Which of the following statements is FALSE?
A. Reports of credit rating agencies do not affect investment decisions
B. Malaysia’s equity market is considered to the performance of regional bourses.
C. Malaysia is highly affected by external developments
D. Cross-border capital flows have benefited resource allocation.

3. Which of the following statement is TRUE about the functions of the International Monetary Fund IMF)?

A. to promote international monetary co-operation and to facilitate the expansion and balanced growth of international trade

B. to promote exchange stability and to assist in the establishment of a multilateral system of payments

C. make its general resources, under adequate safeguards, temporarily available to its members experiencing balance of payments difficulties and shorten the duration and lessen the degree of disequilibrium in the international balances of payments of its 182 members.

D. All of the above

4. On a formal basis, the Malaysian economy is linked to the international environment through its membership and association with a number of global economic and policy institutions. Malaysia is a member of the following organisations. Which of the statements is FALSE.
A. The international Monetary Fund (IMF), which was created to (a) promote international monetary co-operation, (b) facilitate the expansion and balanced growth of international trade, (c) promote exchange stability, (d) assist in the establishment of a multilateral system of payments, (e) make its general resources, under adequate safeguards, temporarily available to its members experiencing balance of payments difficulties and (f) shorten the duration and lessen the degree of disequilibrium in the international balances of payments of its 182 members.
B. The World Trade Organisation (WTO), which is the only global international organisation dealing with the rules of trade between nations. At the heart of the WTO are the WTO agreements, which are negotiated and signed by the bulk of the world’s trading nations and ratified in their participants. The goal is to help producers of goods and services, exporters and importers in their businesses by opening markets through the lowering of tariffs.
C. The World Bank, which is the world’s largest source of development assistance, providing nearly US$30 billion in loans annually to its member countries. The world Bank uses its financial resources, its highly trained staff and its extensive knowledge base to individually help each developing country onto a path of stable, sustainable and equitable growth.
D. The Bank for International Settlements (BIS), which is an international organisation fostering the co-operation of the central banks and international financial institutions. The BIS does accept deposits from or generally provide financial services to private individuals or corporate entities. 

Note: Actually, the BIS does NOT accept deposits from or generally provide financial services to private individuals or corporate entities. 

Economic Analysis And Investment Strategy
Exercise
1. Which of the following is NOT a stage in an economic cycle?
A. Peak to contraction
B. Contraction to trough
C. Trough to peak
D. Trough to expansion

2. There are generally several stages to an economic cycle and which is the following answer is TRUE about the stages of an economic cycle?
I.   peak to contraction
II.  contraction to tough
III. trough to expansion
IV. expansion to peak.

A. I and II only
B. II and III only
C. I, II and IV only
D. All of the above.

3. which of the following is NOT an indicator followed by financial markets?
A. Inflation
B. Interest rates
C. Retail sales
D. Rice consumption

4. which of the following is an indicator for the lagging index?
A. Index of industrial production
B. Salaries and wages
C. Number of new vehicles registered
D. GNP  

Economic indicators
Exercise:
1. What does “expectation” mean in financial market?
A. Prices are discounted by the market
B. The market adjusts to present set of prices
C. Market participants are certain of future prices
D. Market participants do not know what to expect

2. What are the current challenges to official statistics?
A. Globalisation, invisibility and technology
B. All market participants have access to statistics through the internet
C. Leakage of information to market participants before they are released.
D. Coping with the amount of changes

3. What is the impact on the share market and foreign exchange prices when business conditions are stronger than expected?
A. Up
B. Down
C. No relationship
D. No impact

4. If inflation is higher than expected, the prices of fixed income and share market prices will go:
A. Up
B. Down
C. Sideways
D. No relationship

5. It is not much the absolute change in an indicator that financial market participants should be concerned about, but:
A. who collects and publishes the information
B. how it compares to market expectations
C. the explanation released by the government agency
D. what the percentage change is

6. The is an identifiable relationship between the economy (nominal GDP) and financial markets via the:
A. trade balance
B. industrial production index
C. money supply
D. auto sales

7. If money supply picks up, the central bank will tighten monetary policy by:
A. reducing exports
B. reducing government spending
C. increasing foreign investments
D. increasing interest rates

8. An easing in monetary policy by the central bank will bring about:
A. lower interest rates and higher share prices
B. lower interest rates and lower share prices
C. higher interest rates and lower share prices
D. no impact on financial markets.

9. The response of financial markets to different stages of the business cycle will depend on:
A. Bond markets
B. Equity markets
C. Foreign exchange market
D.  All of the above

10. Economic indicators help provide a reading on the economy’s pulse. Some characteristic of economic indicators are:
A. Multidimensional (production, prices, interest rates, and employment)
B. Varied in timing (daily, weekly, monthly and annually)
C. Sourced from various places; and Reported by different agencies.
D. All of the above