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CIMA CIMAPRA17-BA1-1 Exam Questions
BA1 - Fundamentals of Business Economics (Page 8 )

Updated On: 16-Feb-2026
Page 8 of 95
PDF with 468 Questions

A firm is considering a large capital investment project. It is considering delaying it in case the government introduces special tax breaks for investment that will reduce the tax the firm pays. In which stage of the trade cycle is the government least likely to reduce taxation?

  1. Recession
  2. Depression
  3. Recovery
  4. Boom

Answer(s): D



At which stage of the trade cycle should management anticipate a rise in interest rates?

  1. Recession
  2. Depression
  3. Recovery
  4. Boom

Answer(s): D



The Phillips curve shows that the government

  1. cannot use monetary policy to reduce the level of unemployment without causing a rise in interest rates.
  2. can only use fiscal policy to reduce the rate of unemployment in the short run but not in the long run.
  3. can only use expansionary policy to reduce the level of unemployment if it is prepared to accept a higher rate of inflation.
  4. in the long run expansionary fiscal and monetary policy can only lead to higher inflation and higher unemployment.

Answer(s): C



A government might increase its budget deficit in order to reduce

  1. Demand-deficient or cyclical unemployment
  2. Frictional unemployment
  3. Technological unemployment
  4. Classical or real-wage unemployment

Answer(s): A



Which of the following businesses would benefit most from an expansionary monetary policy?

  1. Companies with high levels of borrowing producing consumer durables.
  2. Companies with low levels of borrowing in the supermarket industry.
  3. Cash rich companies producing consumer durable goods.
  4. Low geared companies whose inputs are mainly imported.

Answer(s): A






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