13 questions. Try each one, then open the answer to check yourself and read the explanation.
Which of the following is a consumer good?
Answer: B (Jewelry)
Jewellery is a tangible good bought for personal use; the other options are services.
The price paid for labour services is called
Answer: E (Salary and wages)
Labour is rewarded with wages and salaries; rent, interest and profit reward land, capital and the entrepreneur.
Inflation rate in an economy is measured by means of
Answer: A (Consumer price index)
The consumer price index tracks changes in the prices of a basket of household goods and services.
The instrument of trade protection which allows the entry of only the specified quantity of foreign goods into a country is
Answer: B (Quota)
A quota fixes the maximum quantity of a good that may be imported.
The merchandise trade, services and income account, and unilateral transfers in the balance of payments (BOP) are recorded in the
Answer: A (Current account)
Trade in goods and services, income and transfers all go in the current account.
The difference between the values of merchandise exports and merchandise imports is called
Answer: B (Balance of trade)
The balance of trade is visible exports minus visible imports.
The amalgamation of two or more firms to form a new company is called
Answer: A (Merger)
In a merger two or more firms combine into one new company; in an acquisition one firm buys another.
The input to the production process which represents innovation and risk - taking is
Answer: A (Entrepreneurship)
The entrepreneur organises the other factors, innovates and bears the risk.
Which of the following constitutes a limitation to division of labour?
Answer: E (The size of the market)
Division of labour is limited by the size of the market: specialising only pays when enough can be sold. A–C are disadvantages, not limits.
Which of the following is NOT a function of commercial bank?
Answer: A (Issuing of currency and distribution)
Only the Central Bank issues currency; commercial banks do the rest.
Cheques are NOT money because
Answer: D (They are not generally acceptable as a medium of exchange)
Money must be generally acceptable; a cheque can be refused, so it is not money.
A component of the nation's public debt is
Answer: D (Treasury Bills)
Treasury Bills are short-term government borrowing, so they form part of the public debt.
An economic integration where member states eliminate internal trade barriers and maintain external tariffs against non-member states is
Answer: C (Customs union)
A customs union removes trade barriers among members and sets one common tariff against non-members; in a free trade area each member sets its own outside tariffs.