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CIMA CIMAPRA17-BA1-1 Exam Questions
BA1 - Fundamentals of Business Economics (Page 5 )

Updated On: 15-Feb-2026
Page 5 of 95
PDF with 468 Questions

All of the following are characteristics of a recession except which one?

  1. Rising levels of unemployment.
  2. Increased inflationary pressure.
  3. Improving trade balances.
  4. Increased government budget deficits.

Answer(s): B



Which of the following is the most likely cause of a demand deficient unemployment (or cyclical unemployment)?

  1. A fall in domestic interest rates
  2. Significantly lower labor costs available in a developing country
  3. Improvement in the terms of trade
  4. Excess aggregate demand in the economy of a trading partner

Answer(s): C



Which of the following economic conditions is likely to lead to demand-pull inflation?

  1. An increase in interest rates and a rise in the world price of oil
  2. An increase in government spending and firms operating at full capacity
  3. Increased monopoly power in goods and labor markets
  4. A worsening balance of payments deficit and a rising exchange rate

Answer(s): B



Which ONE of the following would best indicate that economic growth is taking place?

An increase in:

  1. The economy's output gap
  2. Investment to make good wear and tear of the national capital stock
  3. Investment in human capital
  4. Gross domestic product sustained over a number of years

Answer(s): D



In a recession, the appropriate policy for a government seeking a recovery in the economy would be to:

  1. cut public expenditure, reduce taxes, and lower interest rates
  2. raise public expenditure, reduce taxes and lower interest rates
  3. raise public expenditure, raise taxes and lower interest rates
  4. cut public expenditure, raise taxes and raise interest rates

Answer(s): B






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