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Questions # 41:

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

Options:

A.

A rise in business confidence.

B.

An acceleration in the growth of the money supply.

C.

A fall in the level of net personal debt.

D.

An increase in the number of unfilled vacancies.

Questions # 42:

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

Options:

A.

Cash (i.e. notes and coins)

B.

Taxation

C.

Contributions to state-provided pensions

D.

Government bonds

Questions # 43:

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.

Options:

A.

(i), (ii) and (vi) only

B.

(i), (ii) and (v) only

C.

(ii), (iii) and (iv) only

D.

(i), (iii) and (iv) only

Questions # 44:

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

Options:

A.

Depreciation of the currency.

B.

The imposition of an import tax.

C.

Increased income tax.

D.

The use of import quotas.

Questions # 45:

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

Options:

A.

An expansionary fiscal policy

B.

The central bank cutting interest rates

C.

Retraining schemes for redundant workers

D.

A regulation extending employment rights for newly-hired workers

Questions # 46:

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.

Questions # 47:

A government might increase its budget deficit in order to reduce

Options:

A.

Demand-deficient or cyclical unemployment

B.

Frictional unemployment

C.

Technological unemployment

D.

Classical or real-wage unemployment

Questions # 48:

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

Options:

A.

Withdrawals exceeding injections

B.

Aggregate demand exceeding aggregate supply

C.

Injections exceeding withdrawals

D.

A fiscal deficit

Questions # 49:

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

Options:

A.

Expenditure in its shops by foreign diplomats based in the country

B.

The country's contribution to foreign aid

C.

A foreign company signing a contract guaranteeing to invest in a new factory in the country

D.

Repayment of an IMF loan by the country's government

Questions # 50:

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

Options:

A.

Different governments imposing different health and safety requirements for agricultural products

B.

An oil exporting country insisting that oil is paid for in US dollars

C.

The abolition of subsidies given to farmers in the European Union

D.

A requirement by the Japanese government that customs documents be presented and completed in Japanese

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