What is a function of a central bank?
providing bank accounts for individuals
setting foreign trade tariffs
What is a function of a commercial bank?
acting as the lender of last resort
deciding what is a legal tender
determining monetary policy
A central bank acts as a lender of last resort especially in times of financial crisis.
What is the purpose of this function?
to cover credit card debts of consumers
to provide liquidity to the bank system
to remove failing banks from the financial system
to safeguard the profits of the banking system
‘Savers suffer as inflation rises to 4.4 %.’
Which function of money is most involved in this statement?
means of deferred payments
medium of exchange
store of value
unit of account
For anything to be used as money, it must be
a fixed value.
in fixed supply.
Which factor is likely to cause an increase in people’s savings?
an increase in tax rates
an increase in the interest rate
a reduction in economic uncertainty
a reduction in real wages
On completing your studies, you decide you want to work in an organisation that is big enough to give you a chance of promotion but where weekend or shift work will not normally be required.
Which would be the best one to choose?
a dental surgery
a hairdressing salon
an income tax office
a newspaper publisher
Which asset is the most illiquid?
In developed economies, as a person’s real income rises, a lower proportion of that income is usually spent on
What would encourage a rise in spending but not a rise in saving?
easier credit facilities
more people working
rising interest rates
rising standards of living
What may cause an individual to save a higher proportion of their income?
a belief that the price of goods will rise in the future
a fall in the rate of interest paid by the country’s banks
a fear that income will fall in the future
a rise in the individual’s wish to enjoy higher consumption immediately
In which occupations do wages tend to be lowest?
in those where the work is dangerous
in those where workers are paid on a monthly basis
in those where workers need long training
in those where there is an excess supply of labour
Kimberly-Clark Corporation manufactures many products, including Kleenex paper
handkerchiefs. It has operations in 43 countries.
What is not a reason why a company might decide to have operations in more than one country?
availability of raw materials
local markets can be served
transport is a high proportion of costs
trade union pressure
What is usually a function of a trade union?
to determine the amount of dividend paid
to negotiate wage levels with employers
to recommend redundancies
to take responsibility for organising sales of companies’ products
UK flights were severely disrupted in August 2004 after a pay dispute involving trade union
Which change would the union not have used to support their pay claim?
a downturn in the booking of flights
a fall in the real wages of airline staff
an increase in the airlines’ profits
a rise in inflation
A trade union is negotiating a wage rise for its members.
What will increase the chance of the wage rise being granted?
The company’s product has many substitutes
The economy is entering a period of recession
The government has made strike action illegal.
Wages are a small part of the company's costs
What will make it harder for a trade union to increase the wage rate for its members, without
a switch from short-term to long-term fixed contracts of employment
an increase in the number of substitutes for the product
growth in an economy and increased demand for labour
lower price elasticity of demand for the product
What might cause a rise in the proportion of income that a person saves?
a fall in interest rates
a fall in population
a fall in real incomes
a fall in the income tax rate