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CMA JANUARY-2022 EXAMINATION BUSINESS LEVEL
SUBJECT: GE 04. FUNDAMENTALS OF BUSINESS ECONOMICS
Time Allocated: Three hours Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly numbered with the sub-question number then ruled off, so that the markers know which sub-question you are answering.
No of questions No of sub-questions Marks allocation
10 Maximum 03 10 per each question
TURN OVER
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You are advised to spend no longer than 18 minutes on each question. Each question will carry 10 marks.
QUESTION 1
(a) Define National Income?
(b) What are the components of National Income?
(c) Explain the calculation method of National Income?
[Marks: (3+3+4) = 10]
QUESTION 2
(a) Explain the concept of the balance of payments and its implications for the government policy.
(b) What are the main components of Balance of Payment?
(c) What are the causes of fundamental imbalance of Balance of Payment?
[Marks: (4+3+3) = 10]
QUESTION 3
(a) What is Fixed Cost and Variable cost? Please explain with example?
(b) In what time period are all factors of production variable?
(c) Why does the fixed cost per unit change?
(d) Why do diminishing returns occur in short run?
(e) Give two examples of diseconomies of Scale?
[Marks: (5x2) = 10]
QUESTION 4
(a) What are the factors driving Globalization?
(b) What are the main objectives of WTO?
(c) Why Exchange Rate is important?
(d) Give three examples for trade protection policies?
(e) Who are the major institutions encouraging free trade?
[Marks: (5x2) = 10]
QUESTION 5
(a) What is Monopoly Market? Give some example of Monopoly Market?
(b) Explain abuse of Monopoly Power?
(c) What are the evidence of abusing Monopoly Power?
(d) What policies help to prevent abuse of monopoly power?
[Marks: (2+2+3+3) = 10]
QUESTION 6
(a) Identify stakeholders and their likely impact on the goals of organizations and decisions of management
(b) Explain the potential impact on prices and competition of e-business and globalization.
[Marks: (5+5) = 10]
QUESTION 7
(a) What do you know about Central Bank?
(b) Explain the common role of Commercial Banks in International Business?
(c) “Central Bank is the lender of last resort” Please explain?
(d) Briefly explain Financial Intermediary?
[Marks: (2+3+3+2) = 10]
TURN OVER
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(a) What is break-even point and shutdown point?
(b) Consider a Chocolate Manufacturer who operator’s a convenient factory with the following costs;
Fixed Factory OH Cost @ Tk. 60000
Fixed Selling & Admin OH Cost @ Tk. 12000 Variable Manufacturing Cost per unit @ Tk. 12 Variable Selling & Admin Cost per unit @ Tk. 03 The manufacturer’s selling price per unit is TK. 20
(1) What will be the Break-even sales in unit and value?
(2) If the manufacturer sells 7000 units what will be the profit/loss?
(3) If the manufacturer suffers loss, will he shut down its operation? Justify your remarks?
(4) What will be the shutdown point?
[Marks: 2+(4X2) = 10]
QUESTION 9
(a) What are the effects of exchange rate on Business?
(b) What are the roles of Foreign Exchange market in facilitating international Trade?
(c) A Euro zone company has agreed to sell a product to a US customer for $1200.
Suppose the Euro exchange rate was € 1 = $ 1.2 when the deal was agreed but had moved to € 1 = $ 1.25 when the cash received. What was the exchange gain or loss on the transaction?
[Marks: (3+3+4) = 10]
QUESTION 10
Write (Any Four) Short Notes of the following:
(a) Price Inflation;
(b) Trade Deficits and Surplus;
(c) E-Business and Globalization;
(d) International Monetary Fund;
(e) International Trade;
(d) Opportunity cost.
[Marks: (2.5 x 4) = 10]
*END OF QUESTION PAPER*
