Fundamentals of Economics and Finance

What is the basic economic problem that all societies face?

• Inflation

• Scarcity

• Unemployment

• Recession

Which of the following is a characteristic of a perfectly competitive market?

• Few sellers

• Unique products

• Free entry and exit

• Price makers

If the demand for a product increases, what is likely to happen to the price of the product, assuming supply remains constant?

• The price will decrease

• The price will increase

• The price will remain the same

• The price will fluctuate randomly

Which of the following is an example of a fixed expense in a personal budget?

• Groceries

• Rent

• Entertainment

• Dining out

What is the primary purpose of a stock market?

• To provide loans to businesses

• To facilitate the buying and selling of company shares

• To regulate interest rates

• To control inflation

Calculate the simple interest earned on a principal of $1000 at an interest rate of 5% per annum for 3 years.

• $150

• $50

• $200

• $300

Which of the following best describes a bond?

• A share of ownership in a company

• A loan made to a corporation or government

• A savings account with a fixed interest rate

• A type of insurance policy

If the supply of a product decreases while demand remains constant, what is likely to happen to the equilibrium price?

• It will decrease

• It will increase

• It will remain the same

• It will fluctuate randomly

Which of the following is a type of financial market where currencies are traded?

• Stock market

• Bond market

• Forex market

• Commodity market

What is the formula for calculating compound interest?