CMA JANUARY-2023 EXAMINATION

FOUNDATIONAL LEVEL
EF113.BUSINESS ECONOMICS & INTERNATIONAL BUSINESS
MODEL SOLUTION

Solution to the Q No.1

Section A: Multiple-choice questions

(i) (d)
(ii) (c)
(iii) (a)
(iv) (d)
(v) (a)
(vi) (d)
(vii) (b)
(viii) (b)
(ix) (a)
(x) (a)
(xi) (b)
(xii) (b)
(xiii) (c)
(xiv) (b)
(xv) (c)

Solution to the Q No.2

Section A: True or False

(a) False.
Ans: If an economy shifts from lump-sum taxes to income taxes, an increase in government
spending will result in decrease in GDP.
(b) True.
(c) False.
Ans: The marginal rate of substitution measures the slope of the indifference curve, and thus
the subjective exchange rate, i.e. the willingness to exchange one good for another
(d) True.
(e) True.

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Solution to the Q No.5
Section B: Multiple-choice questions
(i) (b)
(ii) (e)
(iii) (c)
(iv) (b)
(v) (c)
(vi) (b)
(vii) (d)
(viii) (a)
(ix) (a)
(x) (a)
(xi) (b)
(xii) (c)
(xiii) (b)
(xiv) (c)
(xv) (a)

Solution to the Q No.6

Section B: True or False
(a) True.
(b) False.
Ans: Opportunity cost and efficiency in production vary from country to country.
(c) True.
(d) True.
(e) True.

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