BA1 – Fundamentals of Business Economics (2017 SYLLABUS) CIMAPRA17-BA1-1-ENG Exam Questions

1. It is necessary to include a balancing item in the balance of payments accounts in order to

2. All of the following are elements of a supply side policy except which one?

3. A country has a trade deficit. The demand for its imports and exports are both price elastic.

All of the following would lead to an a reduction in the country’s trade deficit except which one?

4. All of the following items would appear as a credit on the current account of a country’s balance of payments accounts except which one?

5. In a fully employed economy, which one of the following would lead to demand pull inflation?

6. Which of the following best defines a fiscal policy?

7. Which one of the following policies to correct a balance of payments current account deficit is an example of an expenditure reducing policy?

8. Which global financial institution is responsible for making long term loans to assist developing countries to invest and develop?

9. All of the following are typical features of the downswing phase of the trade cycle except one.

Which ONE is the exception?

10. If an economy went into a recession, which industry would experience the largest proportionate fall in sales, output and employment?

11. Which of the following would not be a reason for a government to impose a quota on imports?

12. CORRECT TEXT

A business is contemplating investing in a new project with a lifespan of three years and a capital cost of $100,000.

The expected net cash flows from the project are as follows:

Year 1 $35,000

Year 2 $50,000

Year 3 $40,000

The cost of capital to the business is 10%

The net present value of the project is: $

13. All of the following are objectives of not-for-profit organizations except one.

Which ONE is the exception?

14. Which ONE of the following is regarded as a general characteristic of an organization?

15. A government might increase its budget deficit in order to reduce

16. Select the best definition of a regressive tax from the options below:

17. All of the following are early indicators of a recovery from a recession except which one?

18. If a government adopted a fiscal policy of cutting its budget deficit, the aggregate demand and supply model shows that the result would be:

19. Which of the following would lead to an increase in a firm’s share price?

20. Which of the following is an invisible import for a country?

21. All of the following items would appear as a credit on the current account of a country’s balance of payments accounts except which one?

22. Part of a country’s unemployment figures will consist of people moving between jobs.

Which type of unemployment is this?

23. As the process of globalization increases, typical businesses will

24. CORRECT TEXT

A bond has a coupon rate of 7%, a nominal value of $100 and a market price of $140

The percentage running yield is %

25. Which of the following best defines “aggregate supply”?

26. Which global financial institution is responsible for providing stabilization funding to assist developed and developing countries with short term borrowing needs and needs for foreign currency?

27. A country is a net oil exporter and the demand for oil overseas is price inelastic. A substantial increase in the world price of oil would tend to

28. The Phillips curve shows that the government

29. Which of the following is the most likely cause of a demand deficient unemployment (or cyclical unemployment)?

30. Which of the following is most likely to lead an economy to suffer high unemployment?

31. In a customs union member countries

32. Which of the following is not likely to result from a fall in the rate of interest?

33. An important distinction between a free trade area and a customs union is that

34. Which ONE of the following would appear as a debit item on a country’s balance of payments current account?

35. The level of national income in the circular flow will remain constant if

36. In a recession which ONE of the following would be likely to experience the largest fall in demand for its products?

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

An increase in:

38. The imposition of a tariff on imported goods by a country’s government will result in all of the following except one.

Which ONE is the exception?

39. All of the following are features of the process of globalization except which one?

40. Which ONE of the following is an External stakeholder in a state-owned energy provider?

41. Oxfam is a charity established to provide aid to the poor.

Which ONE of the following statements about Oxfam is FALSE?

42. Which of the following statements about macroeconomic policy objectives is correct?

43. CORRECT TEXT

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

44. Which of the following economic conditions is likely to lead to demand-pull inflation?

45. Which ONE of the following best explains the statement ‘In not for profit organizations money is a constraint and not a goal’?

46. If in a boom a government adopted a contractionary (restrictive) monetary policy, a typical business would expect to experience:

i. Higher interest payments on its bank borrowing.

ii. Falling credit based sales.

iii. Higher income and corporate taxes.

iv. Lower sales to government agencies.

v. Difficulties in securing working capital

vi. Higher prices for imported components.

47. A country’s gross national product (GNP) will be higher than gross domestic product (GDP) if:

48. In the aggregate supply and demand model, a significant rise in the cost of energy for industry would lead to the

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

50. On an aggregate demand and aggregate supply diagram, cost-push inflation is shown by

51. If a country joined an economic union (for example, the European Union) its business sector could benefit from all of the following except which one?

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

53. Which ONE of the following is NOT required in calculating the EPS of ABC plc?

54. A surplus on the current account of the balance of payments can be financed by

55. Which global institution is concerned with co-coordinating economic policies and agreeing banking and financial regulations?

56. All of the following are regarded as objectives of profit seeking organizations except one.

Which ONE is the exception?

57. The equilibrium level of national income in an economy is the level of income at which

58. CORRECT TEXT

A business has fixed costs of $200. Its total variable costs at different levels of output are as follows:

The business can always sell its output at a price of $100 per unit

The profit maximizing level of output is

59. Which of the following is not taken into account by the discount factor applied to future earnings when calculating shareholder value?

60. All of the following would result from a shift from direct to indirect taxes except which one?

61. Which of the following would not increase barriers to world trade?

62. Which of the following statements about the difference between profit and shareholder wealth is false?

63. A ‘supply-side’ economist would recommend that in the long term, a country’s unemployment problem should be tackled by

64. All of the following are features of an economic union (for example, the European union) except which one?

65. Which of the following businesses would benefit most from an expansionary monetary policy?

66. Identify from the list below the financial instrument that is not a method of government borrowing:

67. The consequences of globalization for national economies include all of the following except which one?

68. Some not-for-profit organizations (NPOs) are required to show they are effective.

Which one of the following most closely defines effective?

69. All the following statements relate to an increase in government spending which is not accompanied by an increase in taxation.

Which statement is NOT correct?

70. Which of the following statements best describes a private firm?

71. Which of the following will be characteristics of the stakeholders most able to influence the management of an organization?

72. Country Y and country Z both impose tariffs on goods imported from each other.

Which of the following would likely to be a long-term effect of the imposition of such tariffs?

73. All of the following are supply side policies to promote economic growth except which one?

74. Which of the following is not a consequence of a country suffering a high rate of inflation?

75. A firm is considering a large capital investment project.

It is considering delaying it in case the government introduces special tax breaks for investment that will reduce the tax the firm pays. In which stage of the trade cycle is the government least likely to reduce taxation?

76. Which global institution is concerned with enforcing the GATT?

77. All of the following are characteristics of a recession except which one?

78. When the economy is in recession, which of the following is least likely to reduce unemployment?

79. All of the following will result from increased international mobility of factors of production except which one?

80. In a recession, the central bank might adopt a policy of low interest rates.

The businesses most likely to benefit from this are those which:

81. In a recession, the appropriate policy for a government seeking a recovery in the economy would be to:

82. The existence of a natural rate of unemployment means that

83. In which of the stages of the trade cycle should the management accountant consider forecasting lower sales than in the previous year?

84. Which of the following would result from a depreciation in the exchange rate for a country’s currency?

i. A fall in the foreign exchange price of that country’s exports.

ii. A rise in the foreign exchange price of that country’s imports.

iii. A rise in production costs for businesses using imported inputs.

iv. A worsening in that country’s terms of trade.

v. A fall in the domestic prices of that country’s imports.

vi. A rise in the domestic price of that country’s exports.

85. A rise in interest rates in an economy would lead to all of the following except which one?

86. Which of the following assertions would not be consistent with supply side economics?

87. The distinguishing feature of a transnational (multinational) company is that

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

89. All of the following are examples of structural unemployment except which one?

90. All of the following would lead to fall in the circular flow of national income except which one ?

91. A business would benefit most from an appreciation in the currency of the country in which it is based if:

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

93. When faced with a recession, the appropriate combination of policies for a government in order to generate a recovery is

94. All of the following could cause the onset of a recession except which one?

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

96. The business sector will be affected by a contraction in the money supply because

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

98. If a government adopted an expansionary fiscal policy of cutting direct taxes, the businesses that would benefit most would be those whose products:

99. Which ONE of the following should NOT be classed as an agent of a firm’s shareholder?

100. Which of the following best describes a project that has a negative Net Present Value?