Download BA1 - Fundamentals of Business Economics Question Tutorial.CIMAPRO17-BA1-X1-ENG.SelfTestEngine.2020-03-31.25q.vcex

Vendor: CIMA
Exam Code: CIMAPRO17-BA1-X1-ENG
Exam Name: BA1 - Fundamentals of Business Economics Question Tutorial
Date: Mar 31, 2020
File Size: 19 KB
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Demo Questions

Question 1
Quantitative easing, the purchase of government or private securities by the central banks from investors, is an example of:
  1. contractionary monetary policy.
  2. contractionary fiscal policy.
  3. expansionary fiscal policy.
  4. expansionary monetary policy.
Correct answer: D
Explanation:
Reference: https://www.investopedia.com/ask/answers/040115/what-are-some-examples-expansionary-monetary-policy.asp
Reference: https://www.investopedia.com/ask/answers/040115/what-are-some-examples-expansionary-monetary-policy.asp
Question 2
A business has a contractual requirement to pay a sum of $6m in a foreign currency in 12 months time. It takes out a forward foreign exchange contract for this sum. 
This is an example of:
  1. translation risk avoidance
  2. economic risk reduction
  3. arbitrage
  4. hedging
Correct answer: D
Explanation:
Question 3
Which THREE of the following businesses are more likely to fare better during a recession? (Choose three.)
  1. A construction company specializing in road infrastructure.
  2. A producer of rice, a staple good.
  3. A producer of automobiles, a durable good.
  4. A producer of security equipment, a counter-cyclical good.
  5. A retailer specializing in fashion, a cyclical good.
  6. A construction company specializing in private residential accommodation.
Correct answer: ABD
Question 4
A trade agreement that removes all import tariffs between member countries, sets up common external tariffs against non-members, but does not advance toward economic integration is called:
  1. an economic union.
  2. a customs union.
  3. a free trade area.
  4. a common market.
Correct answer: B
Question 5
A clothes retailer has estimated a linear trend equation including trend, seasonal and cyclical components to forecast its sales for the next four quarters. 
Which of the following factors would generate actual sales figures that are likely to differ markedly from the forecast?
  1. A drop in sales due to emergency roadwork blocking access to the store.
  2. A drop in sales due to the ongoing economic recession.
  3. An increase in sales due to the increasing popularity of their brand.
  4. An increase in sales before a major religious festival.
Correct answer: D
Question 6
Which of the following statements defines a diseconomy of scale?
  1. A reduction in the unit average cost caused by increasing the scale of production in the long run.
  2. An increase in the unit average cost caused by increasing the scale of production in the long run.
  3. An increase in the unit average cost caused by decreasing the scale of production in the long run.
  4. A reduction in the unit average cost caused by decreasing the scale of production in the long run.
Correct answer: C
Explanation:
Reference: https://www.acowtancy.com/textbook/cima-ba1/economic-and-social-considerations-and-the-regulation-of-markets/diseconomies-of-scale/notes
Reference: https://www.acowtancy.com/textbook/cima-ba1/economic-and-social-considerations-and-the-regulation-of-markets/diseconomies-of-scale/notes
Question 7
Organizations are able to achieve more than individuals can achieve because they allow people to do which THREE of the following? (Choose three.)
  1. To devolve decision-making
  2. To pool resources
  3. To share skills and knowledge
  4. To specialize
  5. To earn profits
  6. To create hierarchies 
Correct answer: BCD
Explanation:
Reference: https://kaplanpublishing.co.uk/docs/librariesprovider3/look-inside/cima/certificate/fundamentals-of-business-economics-ba1/look-inside-study-text-2020-ba1-fundamentals-of-business-economics.pdf?sfvrsn=8bbc7a01_2 (21)
Reference: https://kaplanpublishing.co.uk/docs/librariesprovider3/look-inside/cima/certificate/fundamentals-of-business-economics-ba1/look-inside-study-text-2020-ba1-fundamentals-of-business-economics.pdf?sfvrsn=8bbc7a01_2 (21)
Question 8
An institution offers an 8 percent compound interest rate annually for six years, for an investment of $250,000. 
What is the total amount of interest that would be received over the six years?
  1. $370,000.00
  2. $396,718.58
  3. $146,718.58
  4. $120,000.00
Correct answer: D
Question 9
The government of Country Z imposes a tariff on all imports of coal from other countries. Which THREE of the following are possible effects of this decision in Country Z? (Choose three.)
  1. The cost of living will fall.
  2. Employment in the coal industry will increase.
  3. The balance of payment will improve.
  4. Government's revenue will improve.
  5. Coal producers will adopt new technologies to improve efficiency.
  6. More resources will be allocated to alternative energy sources.
Correct answer: CDF
Explanation:
Question 10
Setting a minimum wage above the equilibrium wage:
  1. has no effect on unemployment, and setting a minimum wage below the equilibrium wage results in increased unemployment.
  2. results in increased unemployment, and setting a minimum wage below the equilibrium wage has no effect on unemployment.
  3. results in decreased unemployment, and setting a minimum wage below the equilibrium wage results in increased unemployment.
  4. results in increased unemployment, and setting a minimum wage below the equilibrium wage results in decreased unemployment.
Correct answer: C
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