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Fundamentals of Business Economics

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Total Questions : 468

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Question # 41

All of the following would be likely to result from the process of globalization except one. Which ONE is the exception?

Options:

A.  

Increased foreign competition in domestic markets

B.  

A widening of price differentials between countries

C.  

For businesses, wider access to supplies of inputs

D.  

Increased international capital flows between countries

Discussion 0
Question # 42

Miss Ruby designs and makes large ornaments for grand buildings. She is informed that her range of candle sticks have a price elasticity of-1.2

Which of the following plans would be most appropriate?

Options:

A.  

Produce more candlesticks

B.  

Create more ornate candlesticks which have a higher cost per product

C.  

Run an expensive ad campaign in an interior design magazine

D.  

Increase the price of candle sticks

Discussion 0
Question # 43

The International Monetary Fund uses the funds at its disposal to

Options:

A.  

Assist national governments with a budget deficit

B.  

Assist national governments to repay their National Debts

C.  

Finance specific development projects in Third World countries

D.  

Help member countries with temporary balance of payments deficits

Discussion 0
Question # 44

All of the following were features of the financial crisis of 2008 except one. Which ONE is the exception?

Options:

A.  

A rise in the volume of mortgage defaults

B.  

A chronic shortage of liquidity in the banking system

C.  

A severe contraction in inter-bank lending

D.  

A sharp fall in rate of interest on inter-bank lending

Discussion 0
Question # 45

Real GDP per capita in an economy is directly affected by

(i). The quantity of resources located in the economy

(ii). How efficiently the economy uses resources when producing goods and services

(iii). The size of the working population

(iv). The flow of investment income from abroad

Options:

A.  

(i) and (iv) only

B.  

(i) and (ii) only

C.  

(ii), (iii) and (iv) only

D.  

(i), (ii) and (iii)

Discussion 0
Question # 46

Which ONE of the following was NOT a contributor to the Global Banking Crisis after 2007?

Options:

A.  

Excessive lending to the sub-prime mortgage market

B.  

Excessive lending by commercial banks against limited reserves

C.  

Economic recession and the credit crunch

D.  

Excessively complicated financial assets which disguised risks

Discussion 0
Question # 47

Which of the functions of a financial intermediary is described by the following statement 'Bundles small deposits of liquidity into larger loans'?

Options:

A.  

Aggregation

B.  

Risk management

C.  

Maturity transformation

D.  

Introducing borrows and lenders

Discussion 0
Question # 48

Which of the following describes the eventual increase in bank deposits that will result from the banking system receiving an additional £2bn of cash deposits whilst holding a cash ratio (or reserve ratio) of 7%?

Options:

A.  

£0.28bn

B.  

£2.15bn

C.  

£14bn

D.  

£28.57bn

Discussion 0
Question # 49

Which of the following might be regarded as benefits of the single currency, the Euro?

(i). Greater freedom for member countries to set their own interest rates

(ii). It is easier to compare prices of consumer goods in all countries using the Euro

(iii). A reduction in transactions costs for trade between countries using the Euro

(iv). Increased economic growth resulting from a more efficient common market

Options:

A.  

(i) and (ii) only

B.  

(i), (ii) and (iv) only

C.  

(iii) and (iv) only

D.  

(ii), (iii) and (iv) only

Discussion 0
Question # 50

During recessions many governments borrow to give them funds to increase government expenditure on job creation schemes. They then repay the borrowed funds during the boom phase. This is an example of which of the following?

Options:

A.  

Aggregation

B.  

Medium term borrowing

C.  

Funding

D.  

Open market operations

Discussion 0
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