Free CIMAPRA17-BA1-1 Exam Braindumps (page: 64)

Page 64 of 118

When central banks adopt a policy of 'quantitative easing' this means that they:

  1. Lift quantitative restrictions on bank lending
  2. Lower the capital adequacy requirements for banks
  3. Buy government bonds from the banks
  4. Ease the liquidity ratios banks need to hold

Answer(s): C



A country's currency depreciates (falls) on the foreign exchange market. All of the following would be the effects of this on businesses within the country except which one?

  1. Businesses would lose income from each export as their export prices would fall.
  2. Businesses would face higher costs as prices of imported goods rose.
  3. Businesses would more easily compete with imported substitutes for their products.
  4. Businesses could keep the foreign exchange price of their exports constant and expand their profit margins.

Answer(s): A



If a country were to join a currency union (for example, the European single currency, the Euro), its businesses would experience all of the following except which one?

  1. Reduced transaction costs on overseas transactions.
  2. Exchange rate certainty.
  3. A common monetary policy.
  4. Reduced price transparency.

Answer(s): D



In the foreign exchange market all of the following are sources of demand for a country's currency except one.
Which ONE is the exception?

  1. That country's exports
  2. Inflow of capital into that country
  3. That country's invisible earnings
  4. Purchases of the currency by the central bank

Answer(s): C



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