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Free CIMA BA1 Practice Exam with Questions & Answers | Set: 5

Questions 41

Which of the functions of a financial intermediary is described by the following statement 'Bundles small deposits of liquidity into larger loans'?

Options:
A.

Aggregation

B.

Risk management

C.

Maturity transformation

D.

Introducing borrows and lenders

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Questions 42

The euro currency market is

Options:
A.

Markets within the European Union where foreign currencies are bought and sold.

B.

The market for the single European currency, the euro.

C.

The market for bank deposits denominated in a currency other than that of the country where the bank is located.

D.

The market for bank deposits which can be switched into any other currency at 24 hours notice.

Questions 43

All of the following are appropriate policies to deal with the problem of industries which cause pollution except which one?

Options:
A.

Taxes on the consumption of the product

B.

Subsidies to the producers

C.

The auctioning of pollution permits

D.

Legal controls to limit pollution levels

Questions 44

All of the following are functions of a central bank except one. Which ONE is the exception?

Options:
A.

Lender of the last resort

B.

Banker to the commercial banks

C.

The conduct of fiscal policy

D.

Regulation of the banking system

Questions 45

The Global Banking Crisis showed that banks had failed in all of the following ways except which ONE?

Options:
A.

Maintain adequate liquidity

B.

Generate adequate profitability

C.

Maintain adequate security of lending

D.

Exercise adequate risk management

Questions 46

If a central bank adopted an expansionary monetary policy the effects would include A.

Options:
A.

rise in interest rates

B.

rise in exchange rate

C.

fall in the rate of inflation

D.

rise in bond prices

Questions 47

In the short run, which of the following would result from a depreciation of the country's exchange rate?

(i). Increased competitiveness of the country's exports

(ii). Increased quality competitiveness of the county's imports

(iii). A worsening of the country's terms of trade

(iv). Increased energy and raw material costs for the country's manufacturing firms

Options:
A.

(i) and (ii) only

B.

(ii) and (iv) only

C.

(iii) and (iv) only

D.

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

Questions 48

Identify in the following list the statement that does not describe a function of a financial intermediary:

Options:
A.

Aggregation of funds

B.

Maturity transformation

C.

Risk transformation

D.

Transfer payments

Questions 49

Which of the following is an example of regulation as a form of government intervention in the economy?

Options:
A.

The government requiring that seat belts are fitted in all coaches and regularly tested

B.

The government announcing the abolition of rules which restrict the number of commercial radio stations allowed by law to operate

C.

The government encouraging the General Medical Council to discipline doctors judged to be professionally negligent

D.

The government selling a state-owned industry such as Air Traffic Control to private ownership

Questions 50

Which of the following describes the eventual increase in bank deposits that will result from the banking system receiving an additional £2bn of cash deposits whilst holding a cash ratio (or reserve ratio) of 7%?

Options:
A.

£0.28bn

B.

£2.15bn

C.

£14bn

D.

£28.57bn

Exam Code: BA1
Certification Provider: CIMA
Exam Name: Fundamentals of Business Economics
Last Update: Jul 10, 2025
Questions: 468

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