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Free CIMA BA1 Practice Exam with Questions & Answers | Set: 12

Questions 111

Which ONE of the following statements best describes the impact of a government minimum price established above free market price?

Options:
A.

It will create a shortage of the product and incentives for producers and consumers to evade the policy

B.

It will create a surplus of unsold produce and reduce farm incomes

C.

It will not affect market price or producer incomes at the present time

D.

It will increase farm incomes but may eventually force the government to introduce maximum quotas on production

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Questions 112

All of the following would provide justification for government competition authorities to investigate the businesses involved except one. Which ONE is the exception?

Options:
A.

The operation of a cartel

B.

A merger between the two dominant firms in an industry

C.

A price fixing agreement between two rival firms

D.

An advertising campaign directly targeting rival firms

Questions 113

According to the principle of comparative advantage which of the following explains how country V may benefit from international trade?

Options:
A.

Specialisation and international trade will only be successful if tariffs are used to protect country V's economy.

B.

Jobs historically done by country V's nationals have been off-shored to countries with cheaper labour costs.

C.

Country V can specialise in exporting oil which it can produce relatively cheaply, and import goods.

D.

Country V will only benefit from international trade if another country loses.

Questions 114

In recent years, consumer groups have become more vocal in calling for the boycott of producers whose suppliers do not comply with international regulations on workplace safety and child labour A fashion company that outsources its production to low labour cost countries should include this phenomenon in which part of their PESTEL framework?

Options:
A.

T

B.

E

C.

S

D.

P

Questions 115

Which TWO of the following are positive impacts for a national economy which hosts a multinational company's (MNC) production facilities within their country"?

Options:
A.

Mobile MNCs mean that operations can easily be transferred from one economy to another.

B.

MNCs provide employment opportunities in other countries for skilled workers from the host country.

C.

Local producers can copy superior processes from the MNC which raises productivity within the recipient economy.

D.

Direct financial investment should improve economic welfare as capital is transferred to economies where the marginal rate of return on capital is highest

E.

MNCs can use transfer pricing to ensure taxes are minimised within a recipient economy.

Questions 116

An institution offers an 8 percent compound interest rate annually for six years, for an investment of S250,000 What is the total amount of interest that would be received over the six years'?

Options:
A.

$370,000.00

B.

$396718.58

C.

$146,718.58

D.

$120.000 00

Questions 117

Conflict between the objectives of shareholders and those of management in a company may anse because

Options:
A.

shareholders are always interested in the short term but those in management are interested in the long term

B.

managers are concerned with the level of profits but shareholders are only interested in the long term share price

C.

raising the pay of management may be incompatible with increasing shareholder value.

D.

managers are more concerned with day to day management than shareholders

Questions 118

Which of the following types of graph uses cumulative frequency distributions to illustrate information?

Options:
A.

Bar chart

B.

Histogram

C.

Scatter graph

D.

Ogive

Questions 119

Which of the following equations is correct regarding interest rates?

Options:
A.

Real interest rate = Nominal interest rate + Expected inflation rate

B.

Real interest rate = Nominal interest rate + Market risk premium

C.

Nominal interest rate = Real interest rate + Expected inflation rate

D.

Nominal interest rate = Real interest rate + Market risk premium

Questions 120

Based on the past twenty months, an event decorating company develops a trend equation for forecasting sales revenue (y) where y = 4.38 + 1.32x.

If month 21 has a seasonal factor of times 1.07, then what is the forecast for the month, using a multiplicative model? Give your answer to two decima places.

Options:
Exam Code: BA1
Certification Provider: CIMA
Exam Name: Fundamentals of Business Economics
Last Update: Jul 15, 2025
Questions: 468

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