ECONOMICS AND FINANCE

Question 1

What is Finance?

Answer 1

Finance is the management of money with the goal to increase wealth

Question 2

What is Capital?

Answer 2

Capital is the wealth in a form of money or other assets held by a person or
organization

Question 3

What is Opportunity Cost?

Answer 3

The cost of one economic decision expressed in terms of the next best
alternative foregone.

Question 4

Market Economy

Answer 4

An economic system in which production and prices are determined by
unrestricted competition between privately owned businesses.

Question 5

Planned Economy

Answer 5

An economy in which production, investment, prices, and incomes are
determined centrally by the government.

Question 6

Mixed Economy

Answer 6

An economic system combining private and state enterprise

Question 7

What is a Modaraba?

Answer 7

Modaraba is a profit-sharing contractual arrangement between an investor and
a managing trustee.

Question 8

What is a Giffen Good?

Answer 8

A good where quantity demanded increases when price rises.

Question 9

What is Price Elasticity of
Demand?

Answer 9

A measure of the extent of changes in the market demand for a good in
response to a change in price

Question 10

What are Economies of Scale?

Answer 10

Factors which lead to the overall decrease in unit cost, as output increases.
These are usually costs which have similar characteristics to fixed costs, and can
be spread out amongst ever greater units, hence reducing the average cost.

Question 11

What are Diseconomies of
Scale?

Answer 11

Factors which lead to the overall increase in unit cost, as output increases. These
are often a result of managers/staff losing control/motivation as
production gets greater.

Question 12

What is a Monopoly?

Answer 12

A market structure where there is just one firm supplying to the whole market.

Question 13

What is Price Discrimination?

Answer 13

The action of selling the same product to different groups of buyers at different prices in order to maximise profits.

Question 14

What is Collusion?

Answer 14

Collusion is a non-competitive, secret, and sometimes illegal agreement
between rivals which attempts to disrupt the market’s equilibrium. The aim is to
gain an unfair market advantage

Question 15

What is GDP?

Answer 15

GDP stands for Gross Domestic Product. It is the total monetary value of all the
goods and services of a country produced and rendered within a specific period

Question 16

What is Inflation?

Answer 16

A continuous increase in the general price level.

Question 17

What is Deflation?

Answer 17

A continuous fall in the general price level

Question 18

What is Economic Growth?

Answer 18

Economic growth is a long-term expansion of a country’s production potential.

Question 19

What is Fiscal Policy?

Answer 19

Fiscal policy is government policy on taxation, spending and government
borrowing.

Question 20

What is Monetary Policy?

Answer 20

Monetary policy consists of the management of money supply and interest rates
to achieve macroeconomic objectives such as controlling inflation, consumption
and growth.

Question 21

What is Balance of Payments?

Answer 21

The balance of payments measures the financial transactions made
between consumers, businesses and the government in one country with
others.

Question 22

What is a Capital Market?

Answer 22

The financial market which is largely used to raise long-term finance and capital

Question 23

What are the Environmental Factors?

Answer 23

P – Political and legal factors
E – Economic factors
S – Social, cultural and demographic influences
T – Technological factors.
E – Ecological
L – Legal

Question 24

What are Stakeholders?

Answer 24

A stakeholder in an organization is a person who has an interest in what
the organization does, and who might therefore try to influence the
decisions and actions of the organization

Question 25

What is Outsourcing?

Answer 25

Outsourcing is the business practice of hiring a party outside a company
to perform services and create goods.

Question 26

What is a Virtual Company?

Answer 26

It is an organization that uses computer and telecommunications
technologies to work routinely with outsourced employees or
contractors. It has no office, no substantial assets and a few full-time
employees

Question 27

What is Downsizing?

Answer 27

Downsizing means the reduction in size of a business organization. It
means that its business activities are conducted by a smaller number of
people

Question 28

What is SWOT analysis?

Answer 28

SWOT analysis is an analysis of strengths, weaknesses, opportunities and
threats. It is a simple but useful technique for analyzing strategic
position

Question 29

What are the Factors of Michael Porter’s
Five Forces Model?
(Factors that determine
competitiveness)

Answer 29

1. Threats from potential entrants
2. Threats from substitute products or services
3. The bargaining power of suppliers
4. The bargaining power of customers
5. Competitive rivalry within the industry or market.

Question 30

What is a Value Chain?

Answer 30

A value chain is a series of activities, each of which adds value. These
activities within and around an organization create a product or service.

Question 31

Primary Value Chain activities:

Answer 31

1. Inbound logistics
2. Operations
3. Outbound Logistics
4. Marketing and Sales
5. Service

Question 32

Secondary Value Chain activities:

Answer 32

1. Purchasing
2. Technology support
3. Corporate Services
4. Human resource

Question 33

What is an Organization?

Answer 33

An organization is a social arrangement for the controlled performance
of collective goals.

Question 34

What is an Organizational Structure?

Answer 34

An organizational structure is the formal arrangement within an
organization that defines how activities and tasks are formally divided
and how processes and information would flow within this structure.

Question 35

What are the types of Organizational
Structures?

Answer 35

1. Entrepreneurial – the entrepreneur is the sole decision maker
2. Functional – Small to Medium Sized Organization – groups of people
   performing similar tasks
3. Matrix – multiple commands systems - dual reporting relationships
4. Divisional – Large entities – Divisions of activities operating like a
   standalone entity - Specific centralized tasks

Question 36

What is a Team?

Answer 36

A team is a group of people using shared resources in order to achieve
common goals.

Question 37

What is a Workgroup?

Answer 37

Workgroups are groups formed by individuals to perform a common
goal or promote similar thoughts and purpose.

Question 38

What is Negotiation?

Answer 38

A formal process that occurs when parties are trying to find a mutually
acceptable solution to a complex conflict.

Question 39

What is an ERP?

Answer 39

Enterprise resource planning (ERP) is a software that allows an
organization to use a system of integrated applications to manage the
business and automate many back-office functions related to
technology, services and human resources.

Question 40

What is Corporate Social Responsibility?

Answer 40

Corporate Social Responsibility is a management concept whereby
companies integrate social and environmental concerns in their business
operations and interactions with their stakeholders.

Question 41

What is a Blockchain?

Answer 41

It is a decentralized distributed ledger that records transactions between
two parties. It moves transactions from a centralized server-based
system to a transparent cryptographic network. The technology uses
peer-to-peer consensus to record and verify transactions, removing the
need for manual verification.

Question 42

What are Economic Sanctions?

Answer 42

Economic sanctions are commercial and financial penalties applied by
one or more countries against a targeted self-governing state, group, or
individual. They may be imposed due to economic circumstances as well
as a variety of political, military, and social issues.