CIMA Exam CIMAPRA17-BA1-1 Topic 2 Question 111 Discussion

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

Question #: 111
Topic #: 2

[All CIMAPRA17-BA1-1 Questions]

A research business compiles the following data for Country D over 8 years:

* Household expenditure, y (in millions of constant 20X6 dollars);

* The number of fixed broadband internet subscribers, x (in thousands).

Based on this information the following regression model is developed:

y = 332668 * 45.8x - 0 003x2

Which of the following statements is correct?

AThe model is based on historical data, so it is of little use in making forecasts

B1 percent increase in the number of fixed broadband internet subscribers will lead to 0 3 percent increase in household final consumption expenditure.

CA non-linear relationship is suggested by the model between household final consumption expenditure and the number of fixed broadband internet subscribers.

DThe model makes accurate forecasts on household final consumption expenditure in Country and therefore it should be widely applied to most countries and regions.

Show Suggested Answer

Suggested Answer: D

by Selene at May 05, 2025, 02:34 PM

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Florinda

8 hours ago

I'm not so sure about option B. A 1% increase in broadband subscribers leading to a 0.3% increase in household expenditure seems a bit too precise. I'd be cautious about relying on that specific percentage change.

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Kimberely

10 days ago

I agree with Yoko. The quadratic term in the regression equation suggests a non-linear relationship. This is an important consideration when using the model for forecasting.

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Yoko

16 days ago

Option C seems to be the correct choice. The model indicates a non-linear relationship between household expenditure and broadband subscribers, which makes sense intuitively.

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