Business Economics (BA1)
150 questions mapped to the CIMA Certificate syllabus (Fundamentals of Business Economics): stable since 2017, with no annual changes unlike ACCA. Covers macroeconomics and microeconomics, data and statistical analysis, and financial mathematics including compound interest, present value and exchange rate parity. Switch to Exam Sim mode for a timed CIMA BA1 mock exam: 60 questions, 2 hours.
→ BA1 Common Mistakes & Exam Technique: the errors that catch BA1 students out, and how to avoid them.
The BA1 exam format
| Format | Computer-based objective test. All questions are compulsory. |
|---|---|
| Length | 2 hours, 60 questions. |
| Scoring | Reported as a scaled score from 0 to 150. Questions are weighted by difficulty, so the scaled score is not a straight percentage of questions answered correctly. |
| Pass mark | 100 out of 150. |
Always check the current exam format on the AICPA & CIMA website before you sit.
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BA1 Formula Sheet: all key formulas on one printable A4 page. Free to download, or see what's on it.
↓ Download PDFSample BA1 questions
Three questions from this bank, each with its answer and worked explanation. The quiz above draws from all 150.
The principal-agent problem in a company arises primarily because:
- Shareholders who own the company and directors who run it may have different objectives
- Companies are required to pay corporation tax on their profits
- The government regulates the prices that some companies can charge
- Employees are legally entitled to a minimum wage
Show answer and explanation
Answer: A. The principal-agent problem arises from the separation of ownership and control: shareholders (principals) delegate decision-making to directors and managers (agents), whose personal objectives may diverge from maximising shareholder wealth. The other options describe taxation, price regulation and employment law respectively — real issues for businesses, but unrelated to the agency relationship between owners and managers.
In the circular flow of income, which of the following is a withdrawal (leakage) from the economy?
- Investment
- Government spending
- Savings
- Exports
Show answer and explanation
Answer: C. Withdrawals (leakages) reduce the circular flow and consist of savings, taxation and imports. Savings are funds removed from the spending stream. Investment, government spending and exports are all injections, which add to the flow. A common error is to confuse the two: injections add demand into the economy, while withdrawals remove it. The trade cycle and national income are driven by the balance between the two.
What is the primary role of a financial intermediary such as a commercial bank?
- To set the level of interest rates for the whole economy
- To print the economy's banknotes and coins directly
- To collect taxes on behalf of the central government
- To channel funds from those with surplus funds to those who wish to borrow
Show answer and explanation
Answer: D. A financial intermediary links savers (those with surplus funds) and borrowers, transforming deposits into loans and managing risk, maturity and liquidity in the process. Setting economy-wide interest rates and issuing currency are functions of the central bank, and collecting taxes is a government function. The intermediation role — bringing together the two sides of the market — is what defines a commercial bank's core activity.
About this question bank
150 questions across 4 syllabus sections, each mapped to a reference in the official CIMA syllabus for BA1 and each with a worked explanation. 105 are multiple choice and 45 are numerical, where you work the answer out before choosing it.
- Written to CIMA's 2017 Certificate in Business Accounting syllabus.
- Spotted a mistake? Report it and it will be corrected.
| Syllabus section | Questions |
|---|---|
| A: Macro | 38 |
| B: Micro | 45 |
| C: Info & Stats | 30 |
| D: Finance | 37 |