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CIMA CIMAPRA17-BA1-1 Exam Questions
BA1 - Fundamentals of Business Economics (Page 9 )

Updated On: 16-Feb-2026
Page 9 of 95
PDF with 468 Questions

When faced with a recession, the appropriate combination of policies for a government in order to generate a recovery is

  1. Tax cuts, reduced public expenditure and lower interest rates.
  2. Monetary expansion, increases in public expenditure and an appreciation of the exchange rate.
  3. Reduction of the fiscal deficit and increased money supply.
  4. Tax cuts, monetary expansion and a depreciation of the exchange rate.

Answer(s): D



Which of the following best defines a fiscal policy?

  1. A policy that increases government spending to increase national income
  2. A policy which seeks to influence the economy through manipulation of government spending and taxation
  3. A policy aimed at influencing the level of aggregate demand in the economy
  4. A policy which controls inflation by controlling the amount of money in the economy

Answer(s): B



Identify from the list below the financial instrument that is not a method of government borrowing:

  1. Cash (i.e. notes and coins)
  2. Taxation
  3. Contributions to state-provided pensions
  4. Government bonds

Answer(s): B



All of the following would result from a shift from direct to indirect taxes except which one?

  1. An increase in the prices of products due to inflation.
  2. A reduction in the disincentive to work and effort.
  3. A more progressive taxation system.
  4. A shift in the burden of taxation towards lower income groups.

Answer(s): C



A rise in interest rates in an economy would lead to all of the following except which one ?

  1. A rise in the exchange rate for the currency
  2. A rise in personal saving
  3. An increase in business investment
  4. A rise in public expenditure

Answer(s): C






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