CIMA Fundamentals of Business Economics (BA1) Practice Exam – All Questions

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Counter trading explained: using real goods and services to offset exposure in international tradeCounter trading is a hedging technique that involves trading goods or services to offset exposures.Economies of scale reveal the most cost‑efficient size for a businessWhich statement best captures the effect of economies of scale?How a price ceiling helps curb inflation in macroeconomics and business economicsSetting a maximum price is often justified to achieve which outcome?Understanding withdrawals in the circular flow: savings, taxes, and imports in macroeconomicsTypes of Withdrawals from the circular flow.What happens in the boom phase: inflation trends and the push on importsDuring the boom stage, which of the following is observed?What the G20 does to promote international financial stabilityWhich group is described as promoting international financial stability?What’s the difference between internationalisation and globalisation in business economics?How do internationalisation and globalisation differ, according to the material?

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Depression phase feature.
Which market is for new financial instruments being sold?
Which of the following is true about excise duties?
Which statement is true about complementary goods?
In the short run, some fixed costs exist. Which option reflects this?
Which statement about the relative quantity index is true?
Which description best defines a histogram?
Dumping in international trade is defined as:
Marginal cost is typically the same as which type of cost?
A rise in production costs will cause the supply curve to shift to the left, which means:
The importance of a stakeholder's opinion depends on what?
Which of the following correctly lists the components of aggregate demand?
Which task involves holding foreign currency reserves and issuing currency?
Taxation is used to raise funds for government to: allocate resources efficiently, distribute income, and manage the economy.
Import penetration measures what aspect of imports?
Which statement about transaction cost and task specificity is correct?
Which item is NOT part of the financial account in the balance of payments?
Which statement best describes globalisation?
Which statement is true about sales tax described as ad valorem?
Which of the following is an external factor causing diseconomies of scale?
National Income is defined as which of the following?
Which is a direct effect of unemployment on tax revenue?
Eurocurrency market characteristics?
Hot money refers to?
Sunset industries are...
Which policy changes the value of the domestic currency to influence the balance of payments?
Which share type is paid out before ordinary shares and typically has no voting rights?
The International currency market is made of which two markets?
Which statement best describes the 'financial account' component in the balance of payments?
Which level of economics deals with decisions made at the company level?
Which feature is associated with a single market?
Gov Policy Effectiveness is based on
Which of the following is a typical consideration when outsourcing?
Which are factors affecting share values?
A unit tax is best described as:
What elasticity value represents unit elasticity?
An annuity is described as which of the following?
Inflation is defined as which of the following?
Which of the following is an example of fiscal policy aimed at promoting economic growth?
In the balance of payments, the capital account records?
The multiplier definition.
An increase in consumer income for a normal good leads to:
What does the principal-agent issue refer to in corporate governance?
Mezzanine financing is best described as
A perfectly elastic price elasticity of supply is represented by which type of line on a graph?
Devaluing the exchange rate typically leads to a decrease in short-term interest rates.
Which statement best describes a barrier to entry for new firms?
Which statement best describes monetary policy?
Which of the following is a pro of trading blocs?
What is the function of the lender of last resort?
If PES equals zero, the supply curve is:
In a network organization, success largely depends on what?
Sunrise industries are new industries that have grown up during the development of new technology and face difficulty becoming competitive globally.
Supply-side policies are likely to cause inflation.
Asset management function is described as funds to create a portfolio of long-term investments with any surpluses that arise. Which option matches this definition?
Which of the following is NOT an internal economy of scale?
Gross redemption yield takes into account which of the following?
Quantitative easing involves which action?
In a Command Economy, whom dictates the quantity supplied and prices paid?
Primary stakeholders have a direct interest in the business and include internal and connected stakeholders.
Which statement best describes the primary role of a network organization?
Not a main currency supply factor?
Which of the following describes elastic demand range according to the material?
Spurious correlation occurs when?
Which are types of incorporated companies?
Which statement best defines big data?
Which is a pro of a monopoly?
Which formula represents Present Value of a future amount?
Which is an example of a free-trade area?
Bills of exchange are commonly used in which area?
What is the effect of the central bank selling treasury bills?
During an economic boom, which government policy is used to reduce aggregate demand?
A Monopolies question: which statement defines a monopoly?
GNP is defined as which of the following?
Which of the following is a non-deposit taking financial intermediary?
Money Market is primarily used for:
Which type of competency is described as being outsourced to anyone?
Property tax is defined as a tax on
What is a typical effect of unemployment on tax revenue?
RPI stands for which of the following?
Where are securities traded after their initial sale?
The coefficient of determination, denoted r^2, measures which of the following?
A potential issue with devaluation is that it may not affect demand if demand is inelastic.
Which statement describes demand-pull inflation?
Economies of scale help you find the optimum size for your business. True or false?
The net dividend yield equals what, expressed as a percentage?
In internal hedging, invoicing in home currency passes FX risk to the customer.
The purpose of hedging with FRAs, IRGs, futures, and options is to:
According to the material, IRR is considered secondary to NPV if results contradict because NPV directly relates to wealth.
Which policy action increases injections into the economy?
Which of the following is a role of the central bank?
Currency options give the owner the right to exchange at a pre-agreed rate. Which statement is correct?
Which of the following are considered other drivers of economic growth?
Main factors of currency supply?
How does perceived risk generally affect the market price of a share?
Which option describes ad valorem taxes, such as sales tax?
What are the two main types of index numbers?
Which statement describes an economic union?
An increase in production costs will cause the supply curve to:
Which statement best describes flexible staffing?
Which of the following is NOT a factor affecting aggregate demand?
Which description best captures Mixed Economy?
Which statement describes an inflationary gap?
What does limited liability mean for owners?
Typical mortgage tenure is
Which of the following is a potential downside of trading blocs?
Which measure includes income earned by residents abroad?
Which statement about secondary data is true?
In regression analysis, the coefficient of determination (r^2) represents?
A balance of payments deficit occurs when imports exceed exports.
In the seven-step data processing sequence, which step is primarily about presenting data visually to users?
Which statement is true about public goods?
Which internal hedging technique matches receipts to reduce the amount that needs to be converted?
What type of loans does the Eurocredit market offer?
In the long run, increasing production capacity tends to make price elasticity of supply:
Which of the following groups is associated with international financial stability rather than broad trade liberalization?
Which of the following is NOT an example of protectionism?
Which service is commonly offered by retail banks?
Which of the following is listed as a disadvantage of unrestricted international trade?
Which statement best describes economies of scale in practice?
Long-term international financing typically refers to which market?
Which statement about IRR is true?
Which statement best describes a competition policy response to monopolies?
What are the two listed types of shares?
Which of the following is NOT a monetary policy tool?
Which factor tends to encourage saving?
Which market trades instruments whose value derives from underlying assets?
Stakeholders are defined as ...
As income increases, consumption
When using moving averages to analyze seasonal variation, the seasonal component is calculated as which of the following?
The real interest rate represents:
Which statement best describes the Commodity Market?
Primary stakeholders are those who have a direct interest in the business and include which groups?
If demand increases while supply is fixed, the equilibrium price tends to:
Net present value (NPV) analysis
Which of the following are examples of financial products?
What best describes economies of scale?
At equilibrium, aggregate supply equals aggregate demand and equals which measure?
What characterizes the recovery stage of the business cycle?
Aggregate supply is defined as the total supply of goods and services that firms in a national economy plan on selling during a specific time period. Which option correctly describes this concept?
Which policy is a common government intervention to support farmers when market price is low?
Which negotiation approach involves taking turns to focus on different stakeholders?
Which statement describes a Private Limited Company?
Which example best illustrates a public good?
Which policy option is a form of protectionism used to influence the balance of payments?
Which pair of risks describes investing in a company?
The Commodity Market is a financial market that trades in which of the following?
Which statement is NOT listed as a use of big data?
The accelerator describes
If public spending is cut, which category of goods is most likely to be affected?
Which statement defines a current liability?
Which of the following is an injection into the circular flow?
Which of the following is an alternative to outsourcing?
Which option correctly describes import penetration versus export performance?
Which statement correctly defines an index number?
Which department is commonly associated with internal economies of scale through bulk purchasing?
Which of the following is an external stakeholder?
Which statement best describes economies of scale as a benefit of international trade?
Which of the following is NOT an outsourcing business structure?
What happens to the required rate of return as investment risk rises?
In the seven-step data processing sequence, which step focuses on organizing data?
Which of the following is a type of financial market?
Interest Rate Futures (IRF) are:
What best describes a credit spread?
Which is a protectionist policy?
Which statement about network organizations is most accurate?
NAFTA is an example of which type of trading bloc?
Which statement is NOT true about certificates of deposit?
Which factor is most likely to encourage saving?
Which technique is an external hedging method?
External economies of scale arise from factors outside the firm. Which of the following is an external economies of scale?
Net dividend yield is defined as which formula?
In a credit agreement, what term describes an asset held to secure repayment of the debt?
Which of the following is a demerit good example?
When a price ceiling below equilibrium is enforced, which phenomenon is likely to emerge?
Which of the following is an example of market failure?
What is another name for a discount house?
Which of the following is an impact of liberalisation of markets under globalization?
The credit multiplier effect is determined by which factors?
Final yield on a corporate bond is equal to which of the following?
What characterizes the international money market?
Which type of unemployment occurs when a worker is between jobs by choice?
Which of the following describes Gross National Product (GNP)?
In moving-average seasonal analysis, which option represents seasonal variation?
Which of the following is one of the six key areas to consider how changes affect a business?
Which is a typical function of financial institutions?
A merit good is best described as which?
Which concept explains why consumption tends to rise when income rises?
Excise duties are taxes levied on
Which instrument is a short-term, unsecured instrument issued by large corporations?
In the banks hierarchy, which is a subdivision of Commercial Banks?
The FOREX Market deals with which activity?
The longer you wait for a return, the higher the amount expected back. Which statement reflects this relationship?
Which of the following is NOT a factor of internal diseconomies of scale?
Which statement about forward exchange contracts is true?
Export performance measures which aspect?
When IRR results contradict NPV, which measure should be preferred?
The balance of payments is best described as the value of the difference between what?
Internal rate of return (IRR) is defined as
What is a key feature of an incorporated company?
Which instrument is listed as a capital market instrument alongside ordinary shares and bonds?
Which statement describes the benefit of specialisation in international trade?
Trade Cycle (4 steps) sequence?
In currency supply factors, which statement is correct?
Which description best captures GDP?
During a recession with weak demand, which statement best describes inflation?
Which statement describes indirect taxes?
Which share type is described as special, not always available, paid before ordinary shares, and has no voting rights?
Which of the following are components of the financial system?
Which organization is described as promoting global trade between nations?
Which graph plots cumulative frequencies and uses running totals?
What best describes Mixed Economy?
Which type of trade arrangement has no common external tariff to non-members?
Negative equity occurs when
Which type of unemployment arises from a mismatch between skills and available jobs due to structural changes in the economy?
What is the discount factor?
External stakeholders are often characterized by
In a free market economy, who dictates prices?
Which is a merit good provided through public finance?
The cash ratio is defined as the ratio of cash and liquid assets to what?
What is included in the current account besides goods?
Mezzanine financing typically carries interest in the range
Earnings per Share (EPS) shows profits available to whom?
A derivative is best described as?
Which scenario is cost-push inflation?
ROCE tells how well capital is used to generate profits. Which option best reflects this statement?
A certificate of deposit is typically characterized by which feature?
Which statement is a pro of using Net Present Value (NPV)?
Which statement describes limited liability?
If a bond has a low credit spread, what can be inferred?
How do financial intermediaries raise funds according to the material?
Which of the following is a problem of inflation?
Which activity is listed as a factor of currency demand most directly linked to trade flows?
Which statement about data types is true?
Which of the following is a feature of debentures?
What is the purpose of the balancing item in the balance of payments?
Which statement directly affects the level of supply in a market?
If the central bank borrows to reduce the currency in circulation, what is the typical effect on interest rates?
Which of the following is listed as a con of IRR?
What is the central bank's role as a last resort for banks?
Interest rate options give the buyer the right to:
In the seven-step data processing sequence, which step is the last?
Which two metrics are used as short-term performance measures to gauge shareholder wealth?
Which is an example of withdrawal from the circular flow?
Leading hedging involves paying in anticipation of exchange rate change.
Direct taxes are taxes on earnings or increases in wage; which of the following is an example?
Which type of bank provides currency conversion and large trade transactions for corporates?
In the short run, which statement is true about costs?
Which term describes industries in the early growth stage within the context of trade?
Wealth tax is a tax based on
Which policy aims to prevent oversupply of agricultural products?
What determines the reserve requirement for a commercial bank?
Public finance is primarily concerned with what?
Which statement describes a bill of exchange?
An improvement in production technology generally causes the supply curve to shift:
What is the wage-price spiral?
Market expectations can influence the supply curve. Which statement best reflects this concept?
The Retail Price Index (RPI) basket includes which of the following components?
The financial system is made up of the organizations and procedures that facilitate transactions among investors, lenders, and borrowers. Which option best represents this concept?
Which of the following is an example of 'Other forms of Financial Intermediaries'?
NOT a purpose of the FOREX market?
Which statement best describes the concept of economies of scale?
Which cost is the cost per unit on average?
If aggregate supply shifts to the left, which effects occur?
Which statement is true about the aggregate quantity index?
Which type of trade arrangement imposes a common external tariff to non-members?
Dividends are best described as?
Which statement about primary data is false?
In the long run, which statement is true?
According to transaction cost theory, what strategic decision does it analyze?
Which is a positive of economies of scale?
Which statement best defines complementary goods?
Which cost represents the total of fixed costs and variable costs?
Which external source category provides unemployment rates and tax rates?
What is the real interest rate equal to?
Index splicing serves to
A government budget surplus during the boom stage is likely.
Moving averages are used to?
What is the main objective of a company?
Consumption tax is a tax on
What does clearing enable in the banking system?
Which of the following is an example of government budget allocation among departments?
What is the effect of the central bank buying treasury bills?
Which market enables smaller, growing companies to access public investment pathways?
Which of the following is NOT a type of competency?
NOT an injection into the circular flow?
An economy that is growing too quickly may experience what?
Which pair is a classic example of complementary goods?
An economy in equilibrium occurs when injections = withdrawals.
Which statement best defines Gross National Product (GNP)?
Which of the following is listed as a benefit of international trade?
If a maximum price is set below the market equilibrium price, which outcome is most likely?
The purpose of trade agreements or blocs is to?
Which pair of metrics are commonly used to measure inflation?
The current account includes?
Perpetuity is defined as
Which negotiation approach involves taking turns to focus on different stakeholders to resolve conflicts?
A price index measures changes in what?
If the price elasticity of supply value is less than 1, the supply is:
Which statement best describes equity finance?
Which of the following is an example of 'Other forms of Financial Intermediaries'?
Which of the following is a factor used to determine the price elasticity of demand?
Consumption is defined as which of the following?
Which category of goods is least affected by income changes during the business cycle?
Which statement best describes market failure?
Which of the following is a good data characteristic?
Voluntary export restraint agreements are ...
A rightward shift of the aggregate supply curve in the short run leads to which combination?
Long-run aggregate supply is defined as the period after maximum quantity produced.
Which scenario would increase GDP but not GNP?
Which of the following is NOT an external economy of scale?
Types of Injections into the circular flow.
Which statement best describes a single market?
The government uses ______ as intermediaries.
What type of company seeks funding by issuing public shares?
Off-shoring involves relocating production to another country primarily to achieve which objective?
Which statement about ordinary shares is true?
A true statement about mortgages is that they
What is the primary objective of shareholders?
Economics is primarily concerned with what?
If demand grows, but there is no supply to fill it, leads to inflation.
In central bank supervision, liquidity refers to what?
Which statement best describes diseconomies of scale?
Connected stakeholders include which of the following?
Debentures typically have which characteristic?
Which two measures are commonly used to gauge economic growth?
Which statement best defines a virtual organization?
Which option best defines internationalisation?
Which statement best distinguishes direct taxes from indirect taxes?
Dirty floating is best described as?
The government loosening the rules on cash creation can encourage more money in the economy. True or False?
True or False: Gross redemption yield allows investors to see if the overall yield equals the required yield.
Which statement about primary data is true?
Which statement best describes nominal return?
Boom stage unemployment question
In the recession stage, which of the following typically occurs?
Which item is an internal source of information?
Which of the following is a capital market instrument?
What is Mendelow's Matrix primarily used to categorize stakeholders based on?
Which of the following is a typical government response to a recession?
Running yield is calculated as which of the following?
Which description best fits a merit good?
Rank correlation coefficient (Rs) measures what?
Which of the following is a money market instrument?
Which market is made up of banks holding currency outside the country of issue and is not subject to domestic reserve requirements?
Allocative efficiency can be described as which of the following?
Time series analysis is primarily used to:
Which of the following is one of the six types of financial markets listed?
Open market operations involve the central bank buying or selling government securities to influence which variable?
Hedging is an investment which reduces or manages foreign exchange risk.
Which type of financing arrangement includes leasing and hire purchase agreements?
Which of the following describes long-term trend in a time series?
Transaction risk refers to the time delay between entering into a contract, settling, and paying more than expected as exchange rate changes.
Internal stakeholders include which group?
Translation risk is the risk that assets held in foreign currency will change in value as exchange rates fluctuate.
If aggregate supply shifts to the right, which effects occur?
Which FX risk arises from changes in exchange rates affecting prices and competition in international markets?
National income is at its maximum when which event occurs?
Broad Money (M4) comprises which?
Time series analysis involves what?
Sinking funds involve:
Which option lists the two main drivers of economic growth?
In the linear demand equation Qd = a - bP, what does b represent?
What is a positive technological impact of globalization?
Which statement defines a regional trade bloc?
Which FX risk can be mitigated by netting assets?
Which term describes 'side payments' in stakeholder negotiation?
Short-run aggregate supply refers to the period before maximum quantity produced.
Insurance Marketplace primarily functions to?
What is a primary function of the international capital market?
Which statement correctly contrasts GDP and GNP?
A bill of exchange can be sold to a financial intermediary for instant cash.
What is the primary purpose of the FOREX market?
Treasury bills are
Equilibrium price is the price where quantity supplied equals quantity demanded.
Reducing currency supply by borrowing more leads to what outcome?
In mezzanine financing, the lender is entitled to a share of equity, which can become collateral if default occurs. This describes
If the value of x equals 1, PES is unit elastic.
What does the capital adequacy ratio measure?
Bounded rationality implies decision making is limited by what factors?
If a company has a high credit rating, what does this imply about default risk?
Which bloc is defined by the free movement of factors of production, enterprise and services?
If government expenditure increases while other factors remain constant, what happens to aggregate demand?
What is the CPI based on?
Off-shoring involves relocating production primarily to achieve which objective?
Which term refers to funds needed for everyday costs such as wages and raw materials?
Which statement about economies of scale is true?
Which outcomes are associated with motivation diseconomies when a firm grows?
The rank correlation coefficient (Rs) is used to measure what?
In the seven-step data processing sequence, which step allows users to search through the data?
Which factor is a driver of international trade and globalisation?
What best describes stagflation?
Which is a potential consequence of protectionism?
External stakeholders include which groups?
Monetary policy is defined as using which tools?
The aggregate supply curve can be split into two concepts. Identify them.
A correlation coefficient of -0.8 indicates which type of relationship?
Which external source would provide economic forecasts and stock market prices?
Which of the following constitutes an injection in the circular flow model?
Which statement best defines Gross Domestic Product (GDP)?
Which of the following is not a type of incorporated company?
Which instrument is a contract between two parties that determines the rate for a future start date?
Which statement about GDP and GNP is true?
Which type of competency would most likely be outsourced to an expert?
Which of the following is a cost of economic growth related to how gains are distributed?
Which statement correctly describes the discount factor?
Cost-push inflation can be caused by which factor?
ROCE stands for:
What does Return on Capital Employed (ROCE) indicate?
Which situation represents a barrier to entry created by economies of scale?
Which of the following is a factor affecting price elasticity of demand?
Which is a negative of economies of scale?
Elasticity measures how one variable responds to changes in another variable, such as price.
Bill rate for a coupon-paying bond is equal to which of the following?
Which statement about aggregate demand is correct?
Credit rating agencies assess the likelihood of default. Which statement best describes their purpose?
Which type of bank focuses on large, complex transactions such as mergers and reorganisations?
The base rate is the rate around which all rates are set. True or False?
FOREX Market serves which primary purpose?
Which statement about aggregate supply is true?
Which service is typically provided by wholesale banks rather than retail banks?
Which market is typically associated with medium to long-term funding and securities?
Fiscal policy is the management of the economy through which instruments?
Which of the following is a central bank function related to the government?
Which of the following would best identify the underlying long-term trend in data?
What leads to a shift in the aggregate demand curve?
Floating exchange rates are defined as
What are the three key challenges identified by Gartner for data?
The quantity/volume index measures change in which type of items?
Which external source category would include trade journals and information on new materials?
Nominal return is best described as?
When aggregate supply is at its maximum, which statements are true?
Which of the following are factors that affect aggregate supply?
Which statement correctly describes a regional trade bloc's level of integration?
Which cost is defined as the cost of producing one more unit?
Which statement is true about a virtual organization?
Which of the following is a form of calculating returns on bonds?
Which statement accurately describes ordinary shares?
Derivatives Market is defined as?
A shareholder is best described as which of the following?
Which of the following is a pro of outsourcing?
Which statement correctly describes elastic vs inelastic demand?
Which statement describes demand-pull inflation?
Which of the following is a criterion for choosing a base year?
Key Players (in Mendelow's Matrix) are stakeholders with which characteristics?
What is a typical government response to stagflation?
Internal stakeholders include which groups?
What is the main source of government funds?
Which area is not listed among the six key areas to consider how current or future changes will affect a business?
What is a potential effect of mergers and acquisitions on the public interest?
A balance of payments surplus occurs when exports are greater than imports.
In the international capital market, who are the borrowers?
Which statement is a drawback of NPV?
One advantage of trading blocs is that negotiations occur at the bloc level rather than with every single country.
The forward premium/discount is ...
Moving averages help to reveal which component of a time series?
Forward exchange contracts are...
Protectionism is best described as:
During inflation, which statement about investment is commonly observed?
An IRG is best described as:
Narrow Money (M0) includes which of the following?
What is a key feature of a shared services organization?
Which central bank function involves debt management?
Which policy is listed as a way the government can manage the balance of payments?
What is dividend yield?
Return on Net Assets (RONA) is associated with which outcome?
Which of the following is a factor affecting aggregate demand?
Netting inter-company transactions is an internal hedging technique where matching is done by a central treasury.
Which tax can be single-stage and multi-stage through manufacturing?
Macroeconomics focuses on decisions made by the government and their effects.
Which of the following is listed as a benefit of globalisation related to product quality and employment?
Allocative efficiency describes which of the following states of an economy?
Which of the following describes a function of the central bank?
Which policy action would slow economic growth?
In a shared services organization, what happens to repeated services?
In the long run, which statement is true about costs?
Boom stage true statement.
Who can issue eurobonds?
An issue with devaluation discussed in the material is that producers may not pass devaluation to customers.
An index number is primarily used to?
As investment risk rises, what do shareholders require?
Which is an injection into the circular flow?
Which of the following is a type of share in the capital market?
What is a long-term performance metric goal for a company?
Which of the following is a commonly cited disadvantage of IRR?
What is the primary goal of corporate governance?
Which statement about the Money Market is correct?
Eurobond market maturity?
Raising the capital adequacy ratio would have which effect on banks' lending capacity?
Broad Money (M4) comprises which?
Which of the following is a deposit-taking financial intermediary?
Deflation is a policy option that reduces demand and can negatively affect economic growth.
What is the effect of replacement investment on the economy?
Investment capital refers to funds used for:
Which of the following is NOT typically considered a factor of consumption?
Monopolies can influence prices by which of the following?
Which statement defines core competencies in the context of this topic?
Which combination tends to stimulate investment?
The payoff for an IRF is typically based on:
The base rate interest rate is best described as which?
Which techniques are used for evaluating investments?
Loan stock is best described as
An Interest Rate Guarantee (IRG) is:

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