Question 1
If the demand curve for good A is negatively sloped, a fall in the price of a substitute good B results in
Correct Answer:
D. A leftward shift in the demand curve for good A
Free CIMA BA1 - Fundamentals of Business Economics CIMAPRA17-BA1-1 Exam Questions
Question 2
A financial intermediary takes the small deposits of millions of savers and uses them to buy an issue of government (treasury) bills and bonds.
Identify from the list below the principle this illustrates:
Correct Answer:
B. Aggregation
Question 3
Which ONE of the following statements best describes the impact of a government minimum price established above free market price?
Correct Answer:
D. It will increase farm incomes but may eventually force the government to introduce maximum quotas on production
Question 4
In a customs union member countries
Correct Answer:
C. Trade freely with each other and accept a common external tariff for trade with the rest of the world
Question 5
If country A imposes a quota on imports from country B, what is the direct effect of the quota?
Correct Answer:
C. The quantity of imports into country A will fall
Question 6
Jacob's Tobacconists have recently been hit by the increase in tax on tobacco products in the UK. The graph shows the drop in demand after the tax was applied to these products.
What might the amount denoted by the difference between PO and P1 on the graph be used for?
Correct Answer:
A. To fund public health services in the UK
Question 7
Miss Ruby designs and makes large ornaments for grand buildings. She is informed that her range of candle sticks have a price elasticity of-1.2
Which of the following plans would be most appropriate?
Correct Answer:
A. Produce more candlesticks
Question 8
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: $
Correct Answer:
A. 3155, 3150, 3159, 3157, 3153, 3152, 3158, 3160, 3156, 3154, 3151
Question 9
Vencia has recently been faced with international condemnation due to its tendency to engage in 'dirty floating'. This is combined with high interest rates as well as underdeveloped industries.
What would likely be the result of these conditions on Vencia's trade?
Correct Answer:
A. A lack of investment from businesses in the long-term; B. Some investment in the short-term due to high interest rates
Question 10
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?
Correct Answer:
B. Medium term borrowing
Question 11
All of the following would tend to make the demand for a good highly price elastic except one. Which ONE is the exception?
Correct Answer:
D. The proportion of consumer income spent on the good is small
Question 12
The demand for salt is generally regarded as price inelastic. Which ONE of the following factors would not contribute to making demand for salt price inelastic?
Correct Answer:
D. Supply rises quickly if demand rises because salt is easy to make
Question 13
If real rates of interest are positive and rising, then
Correct Answer:
D. The desire to hold cash balances will be increasing
Question 14
Which of the following is NOT a characteristic of a pure public good?
Correct Answer:
B. It is always provided by the state or public sector
Question 15
Which of the following is likely to cause the demand curve of margarine to shift to the left?
Correct Answer:
C. A successful advertising campaign by butter producers