QUESTION: 9

'Trade within major trading blocs tends to expand, whereas this is not necessarily the case regarding trade between major trading blocs'. True or false?

True
False

Answer(s): A

Explanation:

This is true.
The purpose of creating or entering into a trading bloc is to increase the volumes of trade between countries within that bloc. This is irrespective of trade between blocs, which may grow or not, de- pending on circumstances.

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QUESTION: 10

Think carefully.
There is low consumer demand; production capacity is unused; prices are stable or are falling; busi- ness profits are low; unemployment is high; and business confidence is low. Is this:

Recovery
Recession
Boom
Depression

Answer(s): D

Explanation:

This is a description of a depression - the worst of all economic situations, which governments will do almost anything to avoid.
A recession is a decline in the performance of the economic factors mentioned (unemployment ris- es), and technically in the UK, a recession would be two successive quarters of decline (reducing economic activity / reducing GDP). A recovery is coming out of recession, and a boom is when the economy is in the opposite state to the depression shown in the question. Generally, an economy's behaviour is cyclical.

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QUESTION: 11

`The value of a commodity or service measured in terms of the standard monetary unit' describes:

Value for money
Price
Value added
Cost

Answer(s): B

Explanation:

The definition shown refers to the word 'price'. The price is what someone will pay for something - the extent to which a customer values something - and the reference to the standard monetary unit refers to, for example, a dollar, a Euro, a dinar or whatever. The other answers are, to some extent, intended to confuse, as they use some of the words shown in the definition. Care must be taken not to jump to a conclusion here. The response 'cost' should give pause for thought, as, in a sense, the cost of doing or making some- thing may have value. But value is determined by the customer - this definition is a reference to the value the customer would pay - the price.

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QUESTION: 12

Which of the following is least risky from the buyer's viewpoint?

Payment on delivery
Payment of 50% at time of order; with balance to be paid 90 days after delivery
Payment in full at time of order
Payment 60 days after delivery

Answer(s): D

Explanation:

Payment (the implication here is 'in full') 60 days after delivery allows the buying organisation time to check the goods carefully, and possibly even use them in that time. All of the other options would require the buyer to part with money prior to holding the goods, thus exposing that sum to risk. The least risky from the buyer's viewpoint is therefore after 60 days. Particularly hazardous would be payment at time of order.

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QUESTION: 9

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Explanation:

QUESTION: 11

Explanation:

QUESTION: 12

Explanation: