Free IIA-CIA-PART3-3P Exam Braindumps
Certified Internal Auditor - Part 3, Business Analysis and Information Technology Questions 426–430 (page: 87)

Updated On: 10-Feb-2026

Performance appraisal systems might use any of three different approaches:
1) who did the job,
2) how the job was done, or
3) what was accomplished.
Which approach is used by a system that places the focus on how the job was done?

  1. Behavior-oriented.
  2. Goal-oriented.
  3. Trait-oriented.
  4. Employee-oriented.

Answer(s): A

Explanation:

Behavior-oriented performance evaluation rewards the behavior that is desired by management. Behavior control involves examining work processes rather than work output.



If a central bank wishes to implement an expansionary monetary policy, which one of the following actions would it take?

  1. Raise the reserve requirement and the rate at which member banks may borrow from the central bank.
  2. Purchase additional government securities and lower the rate at which member banks may borrow from the central bank.
  3. Reduce the reserve requirement and raise the rate at which member banks may borrow from the central bank.
  4. Raise the rate at which member banks may borrow from the central bank and sell government securities.

Answer(s): B

Explanation:

A central bank affects monetary policy primarily through the purchase and sale of government securities. A purchase of securities is expansionary because it increases bank reserves and the money supply. However, the sale of government securities by the central bank contracts the money supply by removing resources from the economy.
Lowering the reserve requirement the percentage of deposits that a bank must keep on hand) also expands the money supply by increasing the loan able funds held by banks.
Similarly, lowering the rate at which member banks may borrow from the central bank encourages borrowing and increases the money supply.



A tight monetary policy is frequently cited as an important policy instrument for fighting inflation. Keynesian n:mists believe that one of the possible undesirable side effects of such a policy is:

  1. Reduced business investment due to higher interest rates.
  2. Reduced business investment due to lower interest rates.
  3. Increased business investment due to decreased government spending.
  4. Increased business investment because of reduced confidence in business.

Answer(s): A

Explanation:

A tight monetary policy means that little money is available for borrowing.
When supply is reduced, the price increases. Thus, interest rates are increased when the money supply contracts. Because of high interest rates, the cost of investment is increased and investment is discouraged.



Which of the following is a tool of monetary policy that a nation's central bank could use to stabilize the economy during an inflationary period?

  1. Selling government securities.
  2. Lowering bank reserve requirements.
  3. Lowering bank discount rates.
  4. Encouraging higher tax rates.

Answer(s): A

Explanation:

Selling government securities is constructional because it takes money out of circulation.



The total exports of Vietnam are US $20,000,000 worth of rice to Greece, and the total exports of Greece are US $18, 11,111100 worth of olives to Vietnam. The terms of trade are:

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): A

Explanation:

A country's terms of trade are calculated by dividing its export price index by its import price index and multiplying by 100. Greece's total exports US $18,000,000) divided by its total imports US $20,000,000) equals 0.9 x 100 = 90. Vietnam's total exports US $20,000,000) divided by its total imports US $18,000,000) equals 1.11 x 100 = 111.



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