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CIMA BA1 - Fundamentals of Business Economics

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Page: 9 / 14
Total 468 questions

All of the following are arguments for privatizing a public sector industry except which one?

A.

The profit motive will make the industry more efficient

B.

The industry will respond more to consumer wishes and preferences

C.

The industry is a natural monopoly

D.

Competition will force the industry to become more efficient

When a tax is imposed upon a commodity which the producers must pay to the government, this will cause the commodities?

A.

Supply curve to shift to the right

B.

Demand curve to shift to the right

C.

Demand curve to shift to the left

D.

Supply curve to shift to the left

Why do monopoly market structures charge higher prices than would be charged by more competitive market structures?

A.

They are more likely to suffer from diseconomies of scale

B.

They must recover their higher research and development expenditures

C.

They can increase profits by reducing output to force prices higher

D.

They have barriers to entry that stop customers going to new markets

An example of forward vertical integration is

A.

The merger between Mercedes and Chrysler in the car industry

B.

A car manufacturer taking over an engine factory

C.

The Ford car company producing refrigerators

D.

A car manufacturer investing in a chain of car showrooms and dealers

Central banks undertake all of the following roles except one. Which ONE is the exception?

A.

Oversight of the liquidity position of commercial banks

B.

The setting of interest rates

C.

Financing the government budget deficit

D.

Ensuring commercial banks meet minimum the capital adequacy requirements

All of the following are advantages of a system of floating (flexible) exchange rates except one. Which ONE is the exception?

A.

They provide automatic correction of imbalances in the balance of payments

B.

Countries no longer need to hold foreign exchange reserves to manage the currency

C.

Countries with inflationary problems can avoid losing international price competitiveness

D.

They encourage international trade by eliminating foreign exchange transactions costs

What is described by the following definition 'the total accumulated amount the state owes to lenders in its own country and internationally'?

A.

The national debt

B.

The fiscal deficit

C.

The balance of payments deficit

D.

The structural deficit

In the foreign exchange market all of the following are sources of demand for a country's currency except one. Which ONE is the exception?

A.

That country's exports

B.

Inflow of capital into that country

C.

That country's invisible earnings

D.

Purchases of the currency by the central bank

A promoter has arranged a large outdoor concert. All the costs are fixed and there are no variable costs associated with the number of spectators attending.

Which of the following statements about the profit maximizing price is FALSE?

A.

It is the price at which Marginal Revenue is zero

B.

At this price, the price elasticity of demand will be unity (i.e. equal to 1)

C.

This price will ensure the promoter covers the cost of the concert

D.

This is the price which maximizes the revenue the promoter earns from the concert

Which of the following is NOT achieved by the price mechanism in a market economy?

A.

Signaling of consumers' requirements

B.

Allocation of adequate resources for future investment

C.

Rationing of scarce resources between potentially unlimited demands

D.

Setting of rewards to factors of production