Sem Qs Flashcards
The level of consumer spending and the amount saved last year by UK households are under _____________________, since…
macroeconomics, as they concern the whole economy
It is rational to buy goods that only increase your satisfaction by a small amount. T or F?
True
A normative statement can never contain _______, ________, or ___________. It cannot be scientifically proven to be true or false.
is, will, always
A positive statement can be tested against facts, and can never contain words such as ___________ or ________________.
could, should
When the price of the good itself changes, whether _______________________, only movement occurs
it’s the demand or supply curve
When the government changes the maximum price, there may be a ______________ or _________________.
surplus; deficit
Price elasticity is always _____________; income elasticity is always __________.
negative; positive
Back in the mid-1990s, the government in the UK announced that for every 10 per cent rise in the price of cigarettes, the demand was likely to fall by 6 per cent. If this information was correct, what was the value of the price elasticity of demand for cigarettes at the time?
Quantity demanded: -6%
Change in variable (income): 10%
-6%/10% = -0.6
When the value of elasticity (price or income) is higher than 1…
Elastic
When the value of elasticity (price or income) is lower than 1 or is 1…
Inelastic
Budget deficit is…
the difference between government revenue and spending measured over a single financial year
Lower interest rate leads to
a fall in the exchange rate
The interest rate in the UK is set by the
Monetary Policy Committee or Central Bank
When the Bank of England buys government securities/bonds on the open market, what effect does this action have on the nation’s money supply and aggregate demand?
money supply increases; aggregate demand increases
Public net sector borrowing
The difference between government expenditure and income over a year
The Bank of England can increase personal income tax rates. True or False?
False
Who would need information on whether the business has the ability to pay for the ordered material?
Suppliers
Who would need information on whether the business will be able to pay for the loan amount and interest when it falls due?
Banks
Who would ask the question: will the company pay out dividends this year?
Shareholders
Who would need information on whether to advise clients to invest in the company?
Investment analyst
Who would ask the question: how much is the company liable for corporation tax and when is it due?
Government
Who would ask the question how much salaries will be paid out to employees this month in the sales department?
Manager
Who would need information on job security and opportunity for promotion?
Employees
4 relevant qualitative characteristics for financial statements
Relevance, reliability, understandability, and comparability
GAAP principle: money is used as the basic measuring unit for financial reporting
Money measurement
GAAP principle: the business operation of an enterprise is assumed to be in existence in the foreseeable future
going concern
GAAP principle: owner’s personal transactions must be separated from that of business
business entity
GAAP principle: every accounting transaction has at least one debit and one credit entry
dual aspect/duality
GAAP principle: income and its associated expenses should be recorded in the same accounting period
matching
