Lesson 2 - economic policy and financial regulation

Question 1

When does the tax year in the uk run from and to?

Answer 1

April 6th - April 5th

Question 2

Name the 4 income tax categories and what falls under them.

Answer 2

1. Income tax - part one. employment income - pensions income - taxable social security benefits.
2. Income tax - part 2 - self employed profits
3. Income tax part 3 - Property income
4. Income tax part 4 - Savings & investment income, icluding interest % share dividends.

Question 3

Name 3 of the 4 taxable benefits in kind?

Answer 3

• Company cars and fuel.
• Private health care.
• Living accomodation, unless it is required for the employee’s duties.
• Interest free loans.
• Child care vouchers.

Question 4

Personal savings allowance

Question 5

Finance houses raise most of their funds through:
1. Wholesale markets.
2. Customer deposits.
3. Retail markets.
4. Private equity markets.

Answer 5

1. Wholesale markets

Question 6

What is the maximum borrowing a building society can raise on the wholesale market?
a) 25% of their assets.
b) 50% of their liabilities.
c) 60% of their liabilities.
d) 75% of their assets.

Answer 6

b. 50% of their liabilities

Question 7

Where lenders and borrowers interact directly, it is known as:
a) intermediation.
b) intermediation placement.
c) indirect intermediation.
d) disintermediation.

Answer 7

d. Disintermediation

Question 8

Which organisation is responsible for managing new issues of UK gilts?

a) The Bank of England.
b) The UK government.
c) The Debt Management Office.
d) The London Stock Exchange.

Answer 8

C. The debt management office.

Question 9

Which of the following is not a function of the Bank of England?

a) Banker to the UK government.
b) Supervising financial markets.
c) Prudential regulation.
d) Issuing bank notes.

Answer 9

c. Prudential regulation

Question 10

In order to be acceptable as a medium of exchange, money must have certain properties. Which of the following is not one of the properties?

a) Divisible into smaller units.
b) Available in high value denominations.
c) Portability.
d) Sufficient quantity.

Answer 10

B. Available in high value denominations.

Question 11

Which one of the following is not an example of a mutual organisation?

a)

Foresters Friendly Society.

b)

Bolton Building Society.

c)

Eastern Bank.

d)

Savers Credit Union.

Answer 11

C. Eastern Bank.

Question 12

The benchmark for financial businesses and institutions to calculate the interest paid on swap transactions and sterling floating rate notes is the:

a)

Monetary Policy Committee rate.

b)

sterling overnight index average.

c)

London interbank offered rate.

d)

Bank of England base rate.

Answer 12

B. Sterling overnight index average (Sonia)

Question 13

Which of the following is not one of the four elements of intermediation?

a)

Aggregation.

b)

Maturity transformation.

c)

Risk transformation.

d)

Equalisation

Answer 13

D. Equalisation

Question 14

The Workers Credit Union has reserves of £60,000, which equals 6% of its assets. This means it:

a)

can only pay interest to savers

b)

can pay dividends or interest to savers.

c)

cannot pay dividends or interest to savers.

d)

can only pay dividends to savers.

Answer 14

B. Can pay dividends or interest to savers.