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Free CIMAPRA17-BA1-1 Exam Braindumps
BA1 - Fundamentals of Business Economics Questions 246–250 (page: 51)

Updated On: 9-Feb-2026
Page 51 of 95
PDF with 468 Questions

The central bank can increase liquidity in the banking system, by:

  1. selling government bonds and lowering interest rates
  2. selling government bonds and raising interest rates
  3. buying government bonds and raising interest rates
  4. buying government bonds and lowering interest rates

Answer(s): D



All of the following were contributory causes of the banking crisis of 2008 (the 'credit crunch') except one.
Which ONE is the exception?

  1. Large scale default in the in the US sub-prime mortgage market
  2. Over- capitalization of commercial and investment banks
  3. The bundling of mortgages into collateralized debt obligations which were sold onto banks
  4. Erroneous credit rating of collateralized debt obligations by credit rating agencies

Answer(s): B



All of the following were features of the financial crisis of 2008 except one.
Which ONE is the exception?

  1. A rise in the volume of mortgage defaults
  2. A chronic shortage of liquidity in the banking system
  3. A severe contraction in inter-bank lending
  4. A sharp fall in rate of interest on inter-bank lending

Answer(s): D



Why was the Global Banking Crisis of 2007 followed by a credit crunch of low lending?

  1. Governments sought to reduce aggregate demand to avoid a boom
  2. Households and firms were unwilling to borrow
  3. Banks had lost reserves and could not support high lending
  4. Households had stop saving due to loss of confidence in commercial banks

Answer(s): C



Which ONE of the following was NOT a consequence of the Global Banking Crisis that began in 2007?

  1. Recession in many developed countries
  2. Increased concern over ability of national governments to borrow
  3. A credit crunch
  4. High monetary inflation

Answer(s): D



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