31) What can a government do to increase demand in its economy?
(A) budget for a surplus
(B) cut taxes
(C) encourage savings
(D) reduce its expenditure
32) What does price elasticity of demand measure?
(A) changes in price caused by changes in demand
(B) the rate of change of sales
(C) the responsiveness of demand to price changes
(D) the value of sales at a given price
33) Which economic term describes the takeover of one textile manufacturer by another?
(B) horizontal integration
(D) vertical integration
34) Which of the following is an example of government policy that could reduce inflation?
(A) increasing bank lending
(B) increasing import duties
(C) reducing government expenditure
(D) reducing direct taxation
35) The currencies of various South East Asian countries fall sharply against the US Dollar. What could help to stop this fall?
(A) an increased inflow of foreign investment
(B) increased government spending
(C) lower income tax
(D) lower interest rates
36) To what does the phrase 'terms of trade' refer?
(A) the currency exchange rate
(B) the difference between the value of visible exports and visible imports
(C) the government's policies to increase exports
(D) the rate at which exports are exchanged for imports
37) What can a central bank increase in order to reduce consumer borrowing?
(A) commercial bank deposits
(B) government spending
(C) interest rates
(D) the exchange rate
38) What is more likely to be found in a free market economy than in a planned economy?
(A) an even distribution of income
(B) an incentive to innovate
(C) a wide range of public goods
(D) full employment of labour
39) Which of the following would not be classified as capital investment by an economist?
(A) an operating theater for a hospital
(B) computers for a bank
(C) new homes for private citizens
(D) share issues for public limited companies
40) Which of the following is an indirect tax?
(A) a tax on company profits
(B) a tax on consumer goods
(C) a tax on income
(D) a tax on wealth