economics for business 10

Which one of the following will NOT tend to increase the number of firms in an industry?

• Product differentiation

• High transport costs

• Decreasing returns to scale

• Low barriers to entry

How many of the following are arguments in favour of privatisation

(i) Privatised companies may be more efficient than nationalised companies

(ii) Denationalisation will create wider share ownership, which will encourage staff to develop a better

understanding of their business and profit drivers

(iii) Privatised companies may have a more profit-oriented management culture than nationalised ones

(iv) Industries can benefit from significant economies of scale arising from natural monopolies

• 4

• 3

• 2

• 1

Which of the following is not an argument in favour of privatisation?

• Privatisation encourages a more profit-oriented management culture

• Privatised industries are more likely to respond to the public interest

• Privatisation reduces bureaucracy and political meddling in the industries concerned

• Privatisation provides a source of money for the government

A number of industries in Freeland have recently been privatised. As a result of the privatisation,

• There is likely to be a more even distribution of wealth and income in Freeland

• Assets have been transferred from the public sector and payments for those assets went to the

  government

• There has been a reduction in competition

• Assets have been transferred from the public sector, and payments for those assets went to the

  private sector

A financial intermediary is best defined as:

• An institution that allows firms to obtain equipment from suppliers by providing leasing or hire

  purchase finance

• An institution that acts as a buffer between the Bank of England and the rest of the UK banking

  System

• An institution that operates on the Stock Exchange, matching buyers and sellers of stocks and shares

• An institution that matches lenders' supply of funds with borrowers' demand for funds

Maturity transformation is:

• The way in which interest rates vary according to the duration of the loan

• The process by which short term deposits are re-lent by banks as longer term loans

• The process by which loans get closer to redemption as time passes

• The amount payable to redeem a loan or security at its maturity

Which of the following is not a source of finance for households?

• Hire Purchase

• Commercial Paper

• Bank overdraft

• Credit cards

Which of the following are not negotiable instruments?

(i) Bank overdraft

(ii) Bill of exchange

(iii) Commercial paper

(iv) Certificate of deposit

• (i), (ii) and (iv)

• (ii) and (iii)

• (i) and (ii)

• (i) only

Which of the following is not a method a firm can use to finance its long-term investments?

• Bank loan

• Issue of new shares

• Retained profits

• Bank overdraft

Financial instruments with maturities of less than one year are traded in the

• Fixed-income market

• Money market

• Capital market

• Equity market