QUESTION: 33

In terms of interest rates, the `base rate' is:

The interest rate set by government or the central bank of a country
The interest rate stated within a contract of supply for late payments
The interest rate payable on a loan for the procurement of a new instrument
The interest rate used to calculate repayments on a credit card

Answer(s): A

Explanation:

The base rate is often used as a basis for the calculation of other rates, some of which eg credit card repayment rates, bear no resemblance to the base rate. Some longer-term, perhaps more responsible, lending, uses changes in the base rate to determine a repayment rate for debt eg mortgage rates. For credit card repayment rates and for late payments in business contracts there is often a considerable amount of freedom to agree relevant rates, but government is often encouraged to influence to try to ensure some level of sanity. The answer which references procurement of a new 'instrument' is an attempt at humour, 'base' be- ing a type of guitar.

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QUESTION: 34

Which of the following could be described as an organisation?

A local authority / local government
A self-employed tutor of online education
The University of Phoenix, Arizona
A business such as Ethiopian Airlines

Answer(s): A,C,D

Explanation:

All except the self-employed tutor have a social arrangement with collective goals, and controls on performance.
The self-employed tutor may have a goal, but it is not collective; is not part of a(n internal) social arrangement and controls on performance may be entirely in their own hands, or perhaps even ab- sent altogether.

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QUESTION: 35

The primary objective of a private sector organisation is...

To boost national prestige
To make profit
To provide services
To create jobs

Answer(s): B

Explanation:

The primary objective of private sector is to create profit(s).
While the other answers may occur in private sector, they are not the primary objective.

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QUESTION: 36

The idea / practice that some users / internal customers will spend organisational funds without in- volving procurement professionals when required to do so by organisational rules, is called:

Off balance sheet procurement
Nonconformist procurement
Merchandise buying
Maverick buying

Answer(s): D

Explanation:

One of the best ways to combat maverick buying is for procurement to be seen to be doing a good job, reducing the justification in colleagues' minds for going outside the system. The other terms shown in the answers are simply made up to create the question. This is your final question in this practice exam - good luck in the real exam!

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QUESTION: 33

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QUESTION: 34

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QUESTION: 35

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QUESTION: 36

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