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Question Bank - Business Studies

External Influences: Test 3

Q1. Which of the following might cause a downturn in the economy?

(Select one answer)

(a) * The demand for a product is exceeding its supply.
(b) * A total fall in output and expenditure.
(c) * Distinct signs of growing business confidence.
(d) * Stocks are starting to exceed demand.

Source: bized

Q2. If the pound increased in value against the dollar what would happen to the price of exports?

(Select one answer)

(a) * Imports will become more expensive and exports will be less expensive.
(b) * An increase in the exchange rate means dearer exports but cheaper imports.
(c) * The exchange is influenced by government action in order to prevent it changing to an undesirable level.
(d) * The government will buy the currency in order to support its value.

Source: bized

Q3. Rising interest rates can have all but one of the following implications for an economy. Which one is it?

(Select one answer)

(a) * Credit sales will fall.
(b) * Investment may start to fall as business loses confidence.
(c) * Potential exporters will see the UK market as one worth selling to.
(d) * As the cost of maintaining working capital rises so stocks will need to be reduced.

Source: bized

Q4. Which of the following is an accurate definition of interest rates?

(Select one answer)

(a) * The cost of borrowing money.
(b) * The price of one currency expressed in terms of another.
(c) * The level of unemployment that is normally apparent in an economy as some people are in between jobs or searching for a new one.
(d) * The setting of the exchange rate by the forces of the market for currency.

Source: bized

Q5. Which of the following would probably NOT be the result of a period of relatively high inflation?

(Select one answer)

(a) * Lower sales within the economy.
(b) * A loss in international competitiveness.
(c) * An increase in the trade surplus of the country.
(d) * Workers demand higher wages.

Source: bized

Q6. Which of the following is NOT a primary cause of inflation in an economy?

(Select one answer)

(a) * Large increases in consumer demand that cannot be adequately meet by current supply.
(b) * Increases in costs, wages, imported goods / components/ raw materials and other expenses.
(c) * A belief amongst many in the population that prices will be rising in the future.
(d) * Falls in the amount of money in circulation beneath the growth rates being recorded by the economy.

Source: bized

Q7. Which of the following is an accurate definition of price inflation.

(Select one answer)

(a) * An increase in prices.
(b) * A persistent increase in the general level of prices.
(c) * Decreases in the general level of prices.
(d) * The index that measures monthly movements in prices.

Source: bized

Q8. Which of the following is a clear sign that an economy is heading for recession?

(Select one answer)

(a) * A rise in the demand for consumer goods.
(b) * Companies start to post growing amounts of bad debts.
(c) * The capacity within the economy is being fully used.
(d) * Potential bottlenecks start to appear within the economy.

Source: bized

Q9. Which of the following might cause cyclical unemployment?

(Select one answer)

(a) * A downturn in world export trade.
(b) * The replacement of coal by gas in many of the UK power stations.
(c) * A fall in the competitiveness of UK clothing products.
(d) * Some workers in the hotel trade being laid off in late October.

Source: bized

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