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CIMA BA1 - Fundamentals of Business Economics

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Page: 12 / 14
Total 468 questions

Which one of the following would lead to a fall (depreciation) in the exchange rate for a country's currency?

A.

A fall in interest rates in that country

B.

An inflation rate below that of the country's trading partners

C.

A fall in that country's imports

D.

A fall in the export of capital from that country

Identify in the following list the statement that does not describe a function of a financial intermediary:

A.

Aggregation of funds

B.

Maturity transformation

C.

Risk transformation

D.

Transfer payments

As a result of a period of rapid economic growth, an economy is likely to experience all of the following except which one?

A.

An improving overseas trade balance.

B.

Falling levels of unemployment.

C.

Increased inflationary pressure.

D.

Rising government tax receipts.

At which stage of the trade cycle should management anticipate a rise in interest rates?

A.

Recession

B.

Depression

C.

Recovery

D.

Boom

Inflation is undesirable for all of the following reasons except which one?

A.

Inflation decreases the international competitiveness of the business sector.

B.

Inflation distorts the price system and the process of resource allocation.

C.

Inflation shifts wealth from debtors to creditors in an arbitrary fashion.

D.

Inflation makes business forecasting and planning more difficult.

Which of the following statements about supply-side economics is correct?

A.

Supply-side policies are part of aggregate demand management policies.

B.

Fiscal policy cannot be used as a part of supply-side policy

C.

Supply-side economists always reject the use of policy to expand demand

D.

Supply-side policies are used to improve the economy's efficiency and competitiveness

Which ONE of the following would best indicate that economic growth is taking place?

An increase in:

A.

The economy's output gap

B.

Investment to make good wear and tear of the national capital stock

C.

Investment in human capital

D.

Gross domestic product sustained over a number of years

Which ONE of the following increases the price of the shares in ABC plc?

A.

A fall in interest rates

B.

Falling demand for some of ABC's key products

C.

Constant ROCE at ABC plc

D.

News of better economic outlook in ABC's home country

Which one of the following would raise both national income and disposable income ?

A.

An increase in transfer payments

B.

A reduction in rates of personal income tax

C.

An increase in business profits

D.

A rise in the rates of personal income tax

A business was selling 20,000 units of its product per month at a price of $10. When it lowers its price to $9 it finds that its sales rise to 24,000 units per month.

The price elasticity of demand for this firm's product is