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CIMA CIMAPRA17-BA1-1 Exam Questions
BA1 - Fundamentals of Business Economics (Page 16 )

Updated On: 19-Apr-2026
Page 16 of 95
PDF with 468 Questions

A business would benefit most from an appreciation in the currency of the country in which it is based if:

  1. it exports to other countries a significant proportion of its output
  2. it imports a high proportion of the raw materials and components it uses
  3. in its domestic market it faces competition from imports
  4. its production costs are largely domestic labor costs

Answer(s): B



Which of the following would result from a depreciation in the exchange rate for a country's currency?

  1. A fall in the foreign exchange price of that country's exports.
    ii. A rise in the foreign exchange price of that country's imports.
    iii. A rise in production costs for businesses using imported inputs.
    iv. A worsening in that country's terms of trade.
  2. A fall in the domestic prices of that country's imports.
    vi. A rise in the domestic price of that country's exports.
  3. (i), (ii) and (iv) only
  4. (i), (iii) and (iv) only
  5. (ii), (v) and (vi) only
  6. (iv), (v) and (vi) only

Answer(s): B



A country is a net oil exporter and the demand for oil overseas is price inelastic. A substantial increase in the world price of oil would tend to

  1. Improve the country's balance of payments on current account
  2. Improve the price competitiveness of manufacturing firms in the country
  3. Cause the country's terms of trade to deteriorate
  4. Increase GDP but not GNP in the country

Answer(s): A



A country has a trade deficit. The demand for its imports and exports are both price elastic. All of the following would lead to an a reduction in the country's trade deficit except which one?

  1. A fall in consumer incomes in the country.
  2. An improvement in the country's terms of trade.
  3. A depreciation in the exchange rate for the country's currency.
  4. A rise in the rate of inflation in its trading partners' economies.

Answer(s): B



If a country joined an economic union (for example, the European Union) its business sector could benefit from all of the following except which one?

  1. Higher profit margins due to a reduction in transport costs.
  2. Economies of scale as it gained access to a larger market.
  3. Lower input costs as imports from other member states would become cheaper.
  4. Reduced costs as a result of access to a wider supply of factors of production.

Answer(s): A



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