CIMA CIMA Certifications CIMAPRO17-BA1-X1-ENG Questions & Answers

• Question 21:

  The following table shows the profits of a business and an index of the general price level for 4 years.

  

  How does the level of real (inflation adjusted) profits in 20X4 compare to those of 20X1?

  A. + $18m

  B. + $12.5m

  C. + $3m

  D. + $0.6m

  Correct Answer: C

• Question 22:

  A business sells soft drinks at $3 a bottle and its current sales are 20,000 bottles per month. The price elasticity of demand for this product is -2. If the price is reduced to $2.70, the change in the total revenue for the business will be:

  A. -$3,300

  B. +$4,800

  C. -$16,800

  D. +$4,000

  Correct Answer: A

• Question 23:

  Which THREE of the following constitute injections into the circular flow of income? (Choose three.)

  A. Savings

  B. Exports

  C. Government expenditure

  D. Investment

  E. Imports

  F. Taxation

  Correct Answer: BCD

  Reference: https://www.tutor2u.net/economics/blog/study-note-the-circular-flow-of-income

• Question 24:

  Which TWO of the following business costs are directly affected by a rise in the interest rate? (Choose two.)

  A. The cost of procuring equity finance.

  B. The cost of complying with government regulations.

  C. The cost of borrowing from private lenders.

  D. The cost of accessing government subsidies.

  E. The cost of procuring intermediate goods.

  Correct Answer: AC

  Reference: http://www.cimaglobal.com/Documents/Student%20docs/2011_CBA/C04_monetarypolicy_june2005.pdf

• Question 25:

  Conflict between the objectives of shareholders and those of management in a company may arise because:

  A. shareholders are always interested in the short term but those in management are interested in the long term.

  B. managers are concerned with the level of profits but shareholders are only interested in the long term share price.

  C. raising the pay of management may be incompatible with increasing shareholder value.

  D. managers are more concerned with day to day management than shareholders.

  Correct Answer: B

• Question 26:

  Which TWO of the following are positive impacts for a national economy which hosts a multinational company's (MNC) production facilities within their country? (Choose two.)

  A. Mobile MNCs mean that operations can easily be transferred from one economy to another.

  B. MNCs provide employment opportunities in other countries for skilled workers from the host country.

  C. Local producers can copy superior processes from the MNC which raises productivity within the recipient economy.

  D. Direct financial investment should improve economic welfare as capital is transferred to economies where the marginal rate of return on capital is highest.

  E. MNCs can use transfer pricing to ensure taxes are minimized within a recipient economy.

  Correct Answer: CD

• Question 27:

  Which THREE of the following are characteristics of good information? (Choose three.)

  A. Accuracy

  B. Confidentiality

  C. Verifiability

  D. Accessibility

  E. Trustworthiness

  F. Relevance

  Correct Answer: ADF

  Reference: https://www.acowtancy.com/textbook/acca-ab/e5-communicating-in-business/good-quality-information/notes

• Question 28:

  Which THREE of the following can be used to reduce the principal-agent problem in business organizations? (Choose three.)

  A. Requiring managers to uphold detailed disclosure and reporting practices.

  B. Introducing bonuses related to the profit performance of the business.

  C. Implementing a 'top-down' decision-making process.

  D. Implementing a share distribution scheme.

  E. Requiring managers to take into account the interests of external stakeholders.

  Correct Answer: ADE

• Question 29:

  A research business compiles the following data for Country D over 8 years:

  Household expenditure, y (in millions of constant 20X6 dollars);

  The number of fixed broadband internet subscribers, x (in thousands).

  Based on this information the following regression model is developed:

  y = 332668 + 45.8x ?0.003?

  Which of the following statements is correct?

  A. The model is based on historical data, so it is of little use in making forecasts.

  B. 1 percent increase in the number of fixed broadband internet subscribers will lead to 0.3 percent increase in household final consumption expenditure.

  C. A non-linear relationship is suggested by the model between household final consumption expenditure and the number of fixed broadband internet subscribers.

  D. The model makes accurate forecasts on household final consumption expenditure in Country D, and therefore it should be widely applied to most countries and regions.

  Correct Answer: C

• Question 30:

  Which of the following will result in an increase in demand for domestic currency?

  A. An increase in exports.

  B. A rise in imports.

  C. More domestic companies invest abroad.

  D. Outward financial flows.

  Correct Answer: B