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Fundamentals of Business Economics Questions and Answers

Question 9

A research business compiles the following data for Country D over 8 years:

* Household expenditure, y (in millions of constant 20X6 dollars);

* The number of fixed broadband internet subscribers, x (in thousands).

Based on this information the following regression model is developed:

y = 332668 * 45.8x - 0 003x2

Which of the following statements is correct?

Options:

The model is based on historical data, so it is of little use in making forecasts

1 percent increase in the number of fixed broadband internet subscribers will lead to 0 3 percent increase in household final consumption expenditure.

A non-linear relationship is suggested by the model between household final consumption expenditure and the number of fixed broadband internet subscribers.

The model makes accurate forecasts on household final consumption expenditure in Country and therefore it should be widely applied to most countries and regions.

Question 10

A business has a short-term problem with its payments exceeding its receipts. Which TWO of the following would be appropriate for meeting this financial shortfall?

Options:

A bank overdraft

A bill of exchange

A mortgage

Issuing shares

A leasing arrangement

Question 11

Which THREE of the following are examples of supply-side policies?

Options:

Increasing investment in vocational training for unemployed youth

Providing tax incentives to firms investing in new technology

Reducing the rate of value added tax applied to consumer goods

Increasing current expenditure on a national medical service

Introducing a funding scheme to support university research

Applying a tariff on the import of foreign technology

Question 12

The following cash flows are for a capital project where the required rate of return is 8 percent

Calculate the NPV for the project. Give your answer to the nearest whole number

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Fundamentals of Business Economics Questions and Answers

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