BA1 Exam Dumps - Fundamentals of Business Economics

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Question # 4

All of the following are typical features of the downswing phase of the trade cycle except one. Which ONE is the exception?

A rise in the level of unemployment

A fall in the rate of inflation

The government budget balance moving towards a deficit

The balance of payments current account moving towards a deficit

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Question # 5

If a country were to join a currency union (for example, the European single currency, the Euro), its businesses would experience all of the following except which one?

Reduced transaction costs on overseas transactions.

Exchange rate certainty.

A common monetary policy.

Reduced price transparency.

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Question # 6

Following a 10% reduction in the value of its currency, the volume of imports into the country falls by 10%, whilst the volume of exports rises by 15%.

Which of the following effects will occur?

Balance of payments will improve

Balance of payments will deteriorate

Terms of trade will improve

The central bank will be forced to borrow more foreign exchange to cover the shortfall

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Question # 7

Which of the following is not a function of a central bank?

Banker to the banking system

Supervision of the banking system

Banker to the government

Regulation of the taxation system