CMA SEPTEMBER-2023 EXAMINATION

FOUNDATION LEVEL
BUSINESS ECONOMICS & INTERNATIONAL BUSINESS

Course Code : EF113 Total Marks : 100

Reading Time : 15 minutes Writing Time : 180 minutes

Instructions to Candidates
 You MUST NOT write anything during the reading time.
 You should attempt ALL questions.
 Answers should be properly structured and relevant.
 Carefully read ALL the requirements and sub-questions before attempting a specific
question.
 ALL answers must be written in the answer book.
 AVOID WRITING/MARKING on the question paper at any time which may cause
disciplinary action.
 Start answering each question from a fresh sheet.
 Answers should be clearly numbered with the sub-question number.

Allowable Materials
 Writing Stationaries
 Non-programmable Calculator

Assessment Structure
Expected
Sub-
Marks Time
question
Required
Question 1 Multiple Choice Questions 15 15 25 minutes
Section Question 2 Modified True/False 5 5 10 minutes
A Question 3 Essay/Case 2 15 25 minutes
Question 4 Essay/Case 2 15 25 minutes
Question 5 Multiple Choice Questions 15 15 25 minutes
Section Question 6 Matching 5 5 10 minutes
B Question 7 Essay/Case 2 15 25 minutes
Question 8 Essay/Case 3 15 25 minutes
Revision 10 minutes
Total 100 180 minutes

RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue

Do not turn the page until instructed

 SECTION A [50 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS SECTION FROM BUSINESS ECONOMICS.
ANSWER ALL THE QUESTIONS IN THE ANSWER SCRIPT FOLLOWING THE EXAMPLE
PROVIDED FOR THE SPECIFIC QUESTION.
QUESTION 1 [15 × 1 = 15 MARKS]
There are fifteen (15) multiple-choice questions with five options. Pick the option that best
explains the given question. Write your answer on the answer script [DO NOT PUT ANY
MARK ON THE QUESTION PAPER]. Follow the example given below in providing your
answer.

Example:
(i) ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh
Answer: (i) (b)

(i) In the long run, a perfectly competitive firm will earn:

(a) Economic profit
(b) Normal profit
(c) Abnormal profit
(d) Losses
(e) None of the above
(ii) The concept of elasticity measures:
(a) The responsiveness of quantity demanded to changes in price
(b) The responsiveness of quantity supplied to changes in price
(c) The responsiveness of income to changes in price
(d) The responsiveness of price to changes in quantity demanded
(e) None of the above
(iii) The law of diminishing marginal returns states that:
(a) As more units of a variable input are added, total output increases at an increasing
rate.
(b) As more units of a variable input are added, total output increases at a decreasing
rate.
(c) As more units of a variable input are added, total output remains constant.
(d) As more units of a variable input are added, total output decreases.
(e) None of the above
(iv) Which market structure has the highest degree of market power?
(a) Perfect competition
(b) Monopolistic competition
(c) Oligopoly
(d) Monopoly
(e) None of the above
(v) Which of the following is an example of a positive externality?
(a) Pollution from a factory
(b) Traffic congestion
(c) Education benefits to society
(d) Noise pollution from construction sites
(e) None of the above

CMA September-2023 Examination, FF113 [Page 2 of 7]

(vi) In business economics, which of the following is a measure of the efficiency with which
resources are allocated in an economy?
(a) Gross domestic product (GDP)
(b) Consumer price index (CPI)
(c) Unemployment rate
(d) Human development index (HDI)
(e) Economic efficiency
(vii) The concept of opportunity cost is best defined as:
(a) The monetary cost of producing a good or service.
(b) The value of the next best alternative foregone when making a choice.
(c) The total cost incurred in producing a good or service.
(d) The profit earned from producing a good or service.
(e) None of the above
(viii) Which of the following is NOT a tool used by the central bank to control the money
supply in an economy?
(a) Open market operations
(b) Reserve requirements
(c) Discount rate
(d) Fiscal policy
(e) Interest rate
(ix) A market demand Schedule for a product indicates that __________.
(a) as the product's price falls, consumers buy less of the good
(b) there is a direct relationship between price and quantity demanded
(c) as a product's price rises, consumers buy less of other goods
(d) there is an inverse relationship between price and quantity demanded
(e) All above.
(x) Capitalism refers to
(a) the use of markets
(b) government ownership of capital goods
(c) private ownership of capital goods
(d) private ownership of homes & cars.
(e) Above all.
(xi) The subject matter of economics is
(a) To ensure economic progress of the people
(b) To run business
(c) To satisfy unlimited wants with limited means
(d) To mobilize resources and to use them
(e) All above.
(xii) Opportunity cost is -
(a) A cost that cannot be avoided, regardless of what is done in the future.
(b) The cost incurred in the past before we make a decision about what to do in the
future.
(c) That which we forgo or give up, when we make a choice or a decision.
(d) The additional benefit of buying an additional unit of a product.
(e) The difference between the actual cost and the budgeted cost.
(xiii) Which factor of production is considered as fixed input?
(a) Labour
(b) Technology
(c) Capital
(d) Land
(e) Raw Materials

CMA September-2023 Examination, FF113 [Page 3 of 7]

(xiv) Implicit costs are ________________.
(a) equal to total fixed costs.
(b) payments for self-employed resources.
(c) comprised entirely of variable costs
(d) always greater in the short run than in the long run
(e) marginal costs incurred only for production.
(xv) When a small change in price leads to infinite change in quantity demanded, it is called
(a) Perfectly elastic demand.
(b) Perfectly inelastic demand.
(c) Relative elastic demand.
(d) Relative inelastic demand.
(e) None of above.

QUESTION 2 [5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or
False. If the statement is false, rewrite the statement on the answer script to make it ‘True’.
Reasoning is NOT required. Follow the example given below in providing your answer.

Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.

Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants
of Bangladesh.

Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the
Industrial Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only
mention that the statement is True.

(a) Price elasticity of demand measures the responsiveness of quantity demanded to

changes in price.
(b) Monopolistic competition is characterized by a large number of buyers and sellers.
(c) Marginal cost is the average cost incurred from producing one more unit of output.
(d) Continually rising prices are one sign of a healthy economy.
(e) A multinational enterprise in a host country needs to operate within the host country's
economic, social, and legal constraints.

QUESTION 3 [8 + 7 = 15 MARKS]
(a) Analyze the impact of a decrease in price on total revenue when the demand for a
product is elastic, inelastic, and unitary elastic.
(b) What is price discrimination? Discuss who can exercise price discrimination and in
which market structure it can be exercised?
QUESTION 4 [8+ 7 = 15 MARKS]
(a) The macroeconomic goals are the high-level growth of output, low unemployment &
stable prices – Discuss.
(b) Draw your advice on Econometric models in Corporate Finance.

END OF SECTION A

CMA September-2023 Examination, FF113 [Page 4 of 7]

 SECTION B [50 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS SECTION FROM INTERNATIONAL
BUSINESS. ANSWER ALL THE QUESTIONS IN THE ANSWER SCRIPT FOLLOWING
THE EXAMPLE PROVIDED FOR THE SPECIFIC QUESTION.

QUESTION 5 [15 × 1 = 15 MARKS]

There are fifteen (15) multiple-choice questions with five options. Pick the option that best
explains the given question. Write your answer on the answer script [DO NOT PUT ANY
MARK ON THE QUESTION PAPER]. Follow the example given below in providing your
answer.

Example:
(i) ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh

Answer: (i) (b)

(i) Which of the following is an advantage of using a global strategy in international

business?
(a) Adaptation to local market conditions
(b) Lower transportation costs
(c) Increased economies of scale
(d) Reduced political risks
(e) Enhanced cultural understanding
(ii) Which of the following is NOT a factor influencing foreign exchange rates?
(a) Inflation rates
(b) Interest rates
(c) Political stability
(d) Balance of trade
(e) Market demand for goods
(iii) Which of the following is an example of a non-tariff barrier to trade?
(a) Import duty
(b) Quota restrictions
(c) Embargo
(d) Dumping practices
(e) Subsidies
(iv) Which of the following is NOT a risk associated with international business?
(a) Political instability
(b) Currency fluctuations
(c) Cultural differences
(d) Technological advancements
(e) Legal and regulatory complexities
(v) Which of the following is an advantage of using a global supply chain in international
business?
(a) Reduced transportation costs
(b) Increased control over operations
(c) Improved responsiveness to customer demands
(d) Enhanced protection of intellectual property rights
(e) Lower risk exposure to political instability

CMA September-2023 Examination, FF113 [Page 5 of 7]

(vi) Which of the following is an example of a strategic alliance in international business?
(a) Exporting goods to a foreign market
(b) Licensing intellectual property rights
(c) Establishing a joint venture with a local company
(d) Outsourcing production to a foreign supplier
(e) Participating in a trade fair
(vii) Which of the following is NOT an objective of regional economic integration?
(a) Promoting free trade among member countries
(b) Enhancing political cooperation and stability
(c) Facilitating movement of labor across borders
(d) Protecting domestic industries from foreign competition
(e) Harmonizing regulatory standards
(viii) Which of the following is an example of a global product strategy in international
business?
(a) Customizing products for local market preferences
(b) Standardizing products across different markets
(c) Licensing intellectual property rights to local partners
(d) Outsourcing production to low-cost countries
(e) Participating in international trade fairs
(ix) According to ______ the holdings of a country’s treasure primarily in the form of gold
constituted its wealth.
(a) Gold Theory
(b) Ricardo Theory
(c) Mercantilism Theory
(d) Heckscher Theory
(e) Monetary Theory.
(x) An example of a cultural factor that can affect international business is-
(a) The weather is too hot for selling ice cream products without refrigeration units
(b) Consumer protection laws require expensive packaging
(c) The major religion prohibits the use of alcohol in any food products
(d) None of the above
(e) All of Above.
(xi) Capital resources include-
(a) Gold, silver, and other minerals
(b) Factories, mines, and talented personnel
(c) Buildings, money, and equipment
(d) None of the above
(e) All of above.
(xii) International business conducted by governments differs from that conducted by
private companies as the former
(a) is involved only in foreign aid transactions.
(b) makes foreign sales but is not involved in investment and transportation.
(c) may not necessarily undertake business for the sake of profit.
(d) will handle transactions on credit.
(e) will handle for the socialism.
(xiii) The unemployment rate is an indicator of a country's economic situation because-
(a) People not earning an income reduce the flow of money in circulation
(b) Fewer goods and services are produced when there is higher unemployment
(c) A high unemployment rate can cause other people to lose their jobs
(d) All of the above
(e) None of above
(xiv) A tax that can be used as a trade barrier is the-
(a) Personal income tax
(b) Excise tax
(c) Value added tax
(d) Import duty tax
(e) All of above.

CMA September-2023 Examination, FF113 [Page 6 of 7]

(xv) TPM refers to –
(a) Transfer Process Methodology.
(b) Transfer Pricing Manipulation.
(c) Treaty for Private Management.
(d) Tariff for Processed Materials.
(e) None of above.

QUESTION 6 [5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or
False. If the statement is false, rewrite the statement on the answer script to make it ‘True’.
Reasoning is NOT required. Follow the example given below in providing your answer.

Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.
Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants
of Bangladesh.
Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the
Industrial Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only
mention that the statement is True.

(a) Dumping refers to selling goods in a foreign market at prices higher than their
production costs.
(b) A joint venture involves two or more companies from different countries forming a new
entity to pursue a specific business opportunity.
(c) The balance of payments measures the flow of goods, services, and capital between a
country and its trading partners.
(d) One reason direct exporting is a relatively low-risk method of getting involved in
international business is because the exporting does not have an extensive investment
in another country.
(e) A country with a large agricultural base is usually more economically developed than
one with a large manufacturing base.

QUESTION 7 [5 + 10 = 15 MARKS]
(a) Explain the concept of globalization and its impact on international business.
(b) Explain the different modes of entry that MNCs can use when expanding into foreign
markets. Compare and contrast the advantages and disadvantages of each mode,
providing real-world examples.

QUESTION 8 [5 +5 + 5 = 15 MARKS]
(a) Explain the role of export-oriented industries in the economic development of
Bangladesh.
(b) Discuss the challenges faced by small and medium-sized enterprises (SMEs) in
Bangladesh.
(c) Analyze the government initiatives to promote foreign direct investment (FDI) in
Bangladesh.

*END OF SECTION B*

CMA September-2023 Examination, FF113 [Page 7 of 7]