CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 90 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 90
Topic #: 1

'The has risen against other currencies since August, defying forecasters who thought that the UK's widening trade deficit must cause the 's exchange rate to fall.'

From the above information, it can be concluded that, since August

AUK exports have become less price competitive

BThe UK inflation rate has increased

CUK interest rates must have increased

DThe strengthening pound has improved the UK balance of payments on current account

Show Suggested Answer

Suggested Answer: C

by Sean at Jun 21, 2024, 07:22 AM

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Dorothy

10 days ago

Wait, the pound is up despite a widening trade deficit? That's like getting a raise while your boss is yelling at you to work harder. Something doesn't add up here.

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Yuki

12 days ago

A) UK exports have become less price competitive. This seems too obvious, but I guess that's the answer the examiners are looking for.

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Eladia

14 days ago

I'm going to have to go with B) The UK inflation rate has increased. That's the only viable option that aligns with the pound's rise despite the trade deficit.

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Demetra

16 days ago

D) The strengthening pound has improved the UK balance of payments on current account. This makes the most sense given the information provided.

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Annett

30 days ago

C) UK interest rates must have increased. That's the only logical explanation for the pound's rise against other currencies. The trade deficit would normally cause the currency to weaken.

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