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  • Exam Name: Fundamentals of Business Economics
  • Last Update: 08-Dec-2023
  • Questions and Answers: 468
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BA1 Questions and Answers

Question # 1

Which TWO of the following policy actions might be available to a government that wishes to reduce a deficit in the balance of payments?


Devaluate the exchange rate in order to increase exports.


Increase the money supply in order to stimulate domestic consumption.


Appreciate the exchange rate in order to reduce imports.


Reduce the interest rate in order to stimulate investment.


Introduce tariffs on imported goods in order to favour domestic producers.

Question # 2

Which of the following are the likely consequences, in the domestic of a county, of an increase in interest rates?

1. A rise in demand for capital goods

2. A fall in demand for consumer good.

3. A fall in demand for housing

4. A rise in the exchange rate.


2,3 and 4


1, 3 and 4


1, 2 and 4


1, 2 and 3

Question # 3

Market price refers to:


the price that is determined by demand and supply.


the price that includes tax


the value that is adjusted for inflation.


the price that maximise profits.

Question # 4

Setting a minimum wage above the equilibrium wage


has no effect on unemployment, and setting a minimum wage below the equilibrium wage results in increased unemployment


results in increased unemployment, and setting a minimum wage below the equilibrium wage has no effect on unemployment.


results in decreased unemployment, and setting a minimum wage below the equilibrium wage results in increased unemployment.


results in increased unemployment, and setting a minimum wage below the equilibrium wage results in decreased unemployment

Question # 5

Which of the following equations is correct regarding interest rates?


Real interest rate = Nominal interest rate + Expected inflation rate


Real interest rate = Nominal interest rate + Market risk premium


Nominal interest rate = Real interest rate + Expected inflation rate


Nominal interest rate = Real interest rate + Market risk premium

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