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BA1 Exam Dumps - CIMA Certificate Questions and Answers

Question # 4

Which TWO of the following business costs are directly affected by a rise in the interest rate*? D The cost of procuring equity finance

Options:

A.

The cost of complying with government regulations.

B.

The cost of borrowing from private lenders.

C.

The cost of accessing government subsidies

D.

The cost of procuring intermediate goods.

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Question # 5

Which THREE of the following does globalisation offer to businesses?

Options:

A.

The opportunity to participate in building international alliances.

B.

The opportunity to comply with national standards

C.

The benefits of protectionist measures

D.

The opportunity to lobby the government for less regulation

E.

By opening up new markets, the opportunity to increase sales

F.

The opportunity to relocate production in countries where the labor cost is lower

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Question # 6

Country A's tax system is one where every citizen pays tax on earned income over S12,000 per year. The amount of tax paid as a percentage of income rises as individuals income levels rise.

Which of the following describes the nature of the tax paid by individuals in Country A?

Options:

A.

Progressive

B.

Regressive

C.

Retentive

D.

Proportional

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Question # 7

A binding financial contract that can be used to hedge exchange rate risks by fixing the rate of exchange at a fixed date, and can be traded in financial markets, is known as:

Options:

A.

an option

B.

a managed floating system

C.

a future

D.

a forward exchange contract

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Question # 8

Which of the following would tend to make the market supply of a good price inelastic?

Options:

A.

There are few barriers to entry into the industry.

B.

Many firms in the industry have unused production capacity.

C.

Most firms in the industry have high stock levels of finished goods.

D.

Newly employed workers in the industry require high levels of initial training.

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Question # 9

Which THREE of the following can be used to reduce the principal-agent problem in business organisations?

Options:

A.

Requiring managers to uphold detailed disclosure and reporting practices

B.

Introducing bonuses related to the profit performance of the business.

C.

Implementing a 'top-down' decision-making process.

D.

Implementing a share distribution scheme.

E.

Requiring managers to take into account the interests of external stakeholders.

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Question # 10

Which of the following is an example of reflationary monetary policy?

Options:

A.

Lowering interest rates in order to boost the economy during a recession.

B.

Introducing a tax on financial transactions in order to reduce the volume of speculative transactions

C.

Increasing investment in education in order to improve the long term competitiveness of the economy

D.

Reducing government expenditure in order to rem in a budget deficit

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Question # 11

Why was the Global Banking Crisis of 2007 followed by a credit crunch of low lending?

Options:

A.

Governments sought to reduce aggregate demand to avoid a boom

B.

Households and firms were unwilling to borrow

C.

Banks had lost reserves and could not support high lending

D.

Households had stop saving due to loss of confidence in commercial banks

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Question # 12

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

Options:

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.

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Question # 13

Which of the following is the most likely policy response to an economic recession?

Options:

A.

Revaluation of the domestic currency

B.

Deflationary policy to prevent rising inflationary pressure

C.

Reduce aggregate demand by raising interest rates, taxation, and reducing public expenditure.

D.

Raise aggregate demand by lowering interest rates, reducing taxation and raising public expenditure

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Exam Code: BA1
Exam Name: Fundamentals of Business Economics
Last Update: Mar 29, 2025
Questions: 468
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