General

Question 1

Investment

Answer 1

Spending on capital goods.

Question 2

Brand Loyalty

Answer 2

This occurs when consumer development a strong preference to a particular good or brand, demonstrated by their repeated purchases of it despite being given choices of competing alternatives.

Question 3

Economic Development

Answer 3

A permanent increase in living standards over time.

Question 4

Product Innovation

Answer 4

The introduction of a good or service that is new or significantly improved with respect to its characteristics and intended uses.

Question 5

Process Innovation

Answer 5

The implementation of a new or significantly improved production or delivery method.

Question 6

Factors that affect investment

Answer 6

• Fiscal incentives (tax concessions on investment)
• Interest rates
• Opportunities created by technological change.
• Market forecast/confidence
• Competitors’ strategies

Question 7

Assets

Answer 7

Items of ownership, both tangible and intangible, that are convertible into cash.

Question 8

• Marginal Propensity to Consume
• Marginal Propensity to Save
• Spending multiplier (formula, definition)

Answer 8

• The proportion of additional income that is spent.
• The proportion of additional income that is saved
• 1/MPS, measure the effect of a rise in government expenditure or investment on the GDP

Question 9

What is the relationship between national income, injections and marginal propensity to save?

Answer 9

Increase in national income = marginal propensity to save x injection