Mock question learnings Flashcards
What of introducing singe currency in an economic union for its member states?
Member states lose the ability to implement monetary policy.
The introduction of a single currency would mean that a new central bank responsible for the monetary policy affecting all members would be established, meaning there would be no way for individual members of the currency union to implement
What can member states of a single currency economic union still do?
The governments of members could still implementsfiscal policy in the form of budgets
Single currencies eliminate transaction costs incurred through transactions between member states
Gross National Product definition
the Gross Domestic Product (GDP) + the net income received by residents from overseas investments
GNP is a measure of national income
What is Unsystematic risk?
Unsystematic risks are ones which affect particular companies due to factors that are specific to them.
e.g. A strongly unionised workforce - can be a risk for the company as they may demand for higher pay
Location of where the company is - if it is based in a deprived area it suggest that it will be difficult for the company to find a skilled workforce
In terms of the trade cycle - what some some features of the economy when its in middle of a boom phase?
Low unemployment and a budget surplus (tax revenues increased due to the high employment rate).
What are characteristics of a depression phase?
unemployment is extremely high and prices begin to fall due to very low demand
What are characteristics of a recession phase?
high unemployment Lower Taxes (to encourage spending) Lower interest rates (to encourage spending) A move in the balance of payments current account towards a surplus - due to a lower demand for imports during a recession
What are characteristics of a Recovery phase?
- unemployment begins to lower again following recession or depression.
- demand and consumer confidence gradually increases
- Increase employment rate will cause an increase in productivity int he economy
- prices will remain constant until beginning to rise gradually, caused by increasing demand
What is the impact on investments in businesses if the rate of income tax is increased?
A decrease in investments in businesses - An increase in income tax would impact higher earners.
As Higher earners are more likely to invest in business/property, this would likely drop if a higher income tax is applied to their earning bracket.
Why would someone choose to save vs. invest when they usually would invest each month?
- Interest rates on savings account have increased
- they cannot afford to lose the money that month
Country X has left an economic union and has failed to negotiate new tariffs for imports/exports with the union.
Which organisation would be responsible for setting tariffs for country X in terms of its trade with the economic union?
The World Trade Organisation
-The WTO sets guidelines for tariffs applied to trade between countries, unless tariffs are agreed between members of an economic union or another international organisation.
What does the G20 do?
20 largest economies
discuss matters of FINANCES and the GLOBAL ECONOMY
What does the G8 do?
smaller org than G20
focuses on ECONOMIC issues + issues of ENVIRONMENT
the HEALTH and LAW enforcement
What are characteristics of GOOD INFORMATION?
Targeted - info that is delivered to the right person at the right time Relevant Accurate Clear Cost-efficient
Felton Inc. need to pay a supplier based in italy approx 4,000EUR in 6 months time
Why would arranging a forward exchange contract be more suitable vs. a futures contract?
Arranging a futures contract would likely me (more) expensive to take out
What does the cash ratio of a bank determine?
is the ratio of cash/liquid assets to the deposits held by the bank (customer deposits are liabilities to the bank).
Eg. if a bank is operating a cash ratio of 24.8%, and a company deposited £13,500 - the bank would need to retain 24.8% of the deposit, but they may lend out the reamainder
Which of the following would explain why Country T has a deficit on the current account of its balance of payments?
*A deficit on the current account of balance of payments = imports > exports
- Rapid economic growth in the country’s trading partners.
- An undervalued exchange rate for the country’s currency.
- Low aggregate demand in the economy.
- Low price competitiveness of industry in the economy.
ANSWER: 4. Poor/low price competitiveness of industry would depress exports and raise imports.
What is the PESTEL Framework designed to do?
‘Identify and assess the external influences that operate on a business in a particular economy or market.’ is the standard definition of the PESTEL framework.
How does positive info about impacts its share price?
-it has a positive effect/increase share price.
Explanation: Share price is linked to the net present value of expected future cashflows. Based on positive info such as market expansion, share price should increase.
Which of the following schemes is least likely to mitigate the principal-agent problem between managers and shareholders?
- Introduction of a share option scheme for managers.
- Introduction of a bonus scheme for managers tied to the sales performance of the company.
- Introduction of a bonus scheme for managers tied to the profit performance of the company.
- Introduction of a flat compensation scheme for managers.
Answer: 4 - the flat compensation scheme does not tie the manager’s remuneration to the company’s profits (directly or indirectly)
Which of the following is an argument in favour of privatisation?
- It secures economies of scale.
- It guarantees fewer services and lower prices.
- It improves efficiency.
- It achieves a more equal distribution of wealth.
Answer: 3 - Improved efficiency is one of the arguments for privatisation.
Which THREE of the following statements fulfill the characteristics of good information?
- Reports should always be accurate to the nearest cent.
- Technical language and jargon should be used freely in a report.
- Information should be complete but not excessive in amount.
- Information within a report should be relevant.
- The value of information within a report should be lower than the cost of producing it.
- Information within a report needs to be delivered to the appropriate person in time for them to make a decision.
ANSWER:
- Information should be complete but not excessive in amount.
- Information within a report should be relevant.
- Information within a report needs to be delivered to the appropriate person in time for them to make a decision.
Which TWO of the following are applications of big data?
- A marketing company combining tracked day to day movements of 30,000 individuals with billboard locations to provide fairer advertising pricing.
- A supermarket summarising till receipts using a standard accounting software package in order to produce management information.
- An airline providing a mobile application which has allowed one million customers to track luggage over a year.
- A spreadsheet analysis of the average cost of production of one type of chocolate bar over one day in a confectionery factory.
- A list of all the purchase invoices received by a company over a month.
Answer: 1. A marketing company combining tracked day to day movements of 30,000 individuals with billboard locations to provide fairer advertising pricing.
3.An airline providing a mobile application which has allowed one million customers to track luggage over a year.
In each case, large amounts of data from different sources is combined and analysed and used for a distinct purpose. For example, the information regarding luggage movements is being combined for all flights and then being analysed to allow customers to track their luggage.
Definition of Big data
Big data is data that is too large to analyse and interpret using standard reporting tools
