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QUESTION NO: 1
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?
A. Funding
B. Aggregation
C. Medium term borrowing
D. Open market operations
Answer: C

QUESTION NO: 2
Conflict between the objectives of shareholders and those of management in a company may anse because
A. managers are concerned with the level of profits but shareholders are only interested in the long term share price
B. raising the pay of management may be incompatible with increasing shareholder value.
C. managers are more concerned with day to day management than shareholders
D. shareholders are always interested in the short term but those in management are interested in the long term
Answer: C

QUESTION NO: 3
All of the following are characteristics of a recession except which one?
A. Rising levels of unemployment.
B. Improving trade balances.
C. Increased government budget deficits.
D. Increased inflationary pressure.
Answer: D

QUESTION NO: 4
Which of the following is most likely to lead to a rise in the exchange rate of country's currency and a fall in the price of stocks shares?
A. An increase in the country's money supply
B. An increase in the deficit in the country's balance of payments on current account
C. Foreign investors purchasing shares on the country's capital markets
D. An increase in rates of interest within the country
Answer: D

QUESTION NO: 5
Which of the following best describes the term 'National Debt'?
A. Money the government owes to governments of other countries
B. The accumulated borrowings by the government in previous years that have not yet been repaid
C. Money the government must borrow to make up the shortfall between tax revenue and government expenditures
D. Special assets issued by government to finance wars
Answer: B

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Updated: May 28, 2022