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Fundamentals of Business Economics Questions and Answers

Question 61

A country's currency depreciates (falls) on the foreign exchange market. All of the following would be the effects of this on businesses within the country except which one?

Options:

Businesses would lose income from each export as their export prices would fall.

Businesses would face higher costs as prices of imported goods rose.

Businesses would more easily compete with imported substitutes for their products.

Businesses could keep the foreign exchange price of their exports constant and expand their profit margins.

Question 62

Identify which of the following features does not distinguish redeemable debt apart from equity:

Options:

It has a face value which shows its value at redemption

It will pay a regular set sum of interest

It will have a maturity date when it will mature

It will never be traded on an investment market

Question 63

A government may try to reduce a balance of payments deficit on current account by using either expenditure-reducing policies or expenditure-switching policies.

Which of the following is an expenditure-reducing policy?

Options:

Devaluation of the exchange rate

Imposing tariffs and quotas on imports

Export subsidies

Higher income tax rates

Question 64

Which of the following statements about government debt is false?

Options:

It is exclusively traded by the Central Bank

Individuals can buy it from stock brokers

Notes and coins in circulation make up a very small part of government debt

It can be issued by Local as well as Central government

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Fundamentals of Business Economics Questions and Answers

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