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CIMA BA1 - Fundamentals of Business Economics

Page: 11 / 14
Total 468 questions

What international convention regulates banking?

A.

Basel 3

B.

GATT

C.

G20

D.

Competition Act

In a system of freely floating exchange rates the central bank and government will

A.

Not need to engage in exchange equalization

B.

Allow market forces to determine the exchange rate within a strictly limited band

C.

Have less ability to control the money supply than in a fixed exchange rate system

D.

Have to intervene in foreign exchange markets in order to maintain the system

All of the following were features of the financial crisis of 2008 except one. Which ONE is the exception?

A.

A rise in the volume of mortgage defaults

B.

A chronic shortage of liquidity in the banking system

C.

A severe contraction in inter-bank lending

D.

A sharp fall in rate of interest on inter-bank lending

If a group of countries have adopted:

(i). Free trade in goods and services between member states,

(ii). Free movement of capital and labor between member states,

(iii). A common external tariff policy,

This would be an example of a(n)

A.

free trade area

B.

customs union

C.

common (or single) market

D.

economic union

All other things remaining equal, which of the following would encourage a speculative short-term capital flow into a country's currency?

A.

A fall in the country's interest rates

B.

An expected depreciation of the country's exchange rate

C.

The abolition by the country of previously-imposed exchange controls which deterred inward investment

D.

Foreign-based multinational companies locating new factories in the country

Why was the Global Banking Crisis of 2007 followed by a credit crunch of low lending?

A.

Governments sought to reduce aggregate demand to avoid a boom

B.

Households and firms were unwilling to borrow

C.

Banks had lost reserves and could not support high lending

D.

Households had stop saving due to loss of confidence in commercial banks

During recessions many governments borrow to give them funds to increase government expenditure on job creation schemes. They then repay the borrowed funds during the boom phase. This is an example of which of the following?

A.

Aggregation

B.

Medium term borrowing

C.

Funding

D.

Open market operations

The following figures relate to a particular economy.

From the above information, it can be correctly concluded that each pound was spent an average of

A.

2 times

B.

5 times

C.

25 times

D.

50 times

Which of the following is not a function of a central bank?

A.

Banker to the banking system

B.

Supervision of the banking system

C.

Banker to the government

D.

Regulation of the taxation system

If a country were to join a currency union (for example, the European single currency, the Euro), its businesses would experience all of the following except which one?

A.

Reduced transaction costs on overseas transactions.

B.

Exchange rate certainty.

C.

A common monetary policy.

D.

Reduced price transparency.