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BA1 – Fundamentals of Business Economics

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Showing 4–6 of 20 questions

Question 4

Which THREE of the following constitute injections into the circular flow of income?

Select all that apply, then click Submit answer.

  • ○

    Savings
  • ○

    Exports
  • ○

    Government expenditure
  • ○

    Investment
  • ○

    Imports
  • ○

    Taxation
Question 5

Company X is a wholesaler. It sells the majority of its products in bulk to a small number of restaurants and cafes in the local area.

Which of the following will Company X experience in light of this? Select ALL that apply.

Select all that apply, then click Submit answer.

  • ○

    A reduction in distribution costs as a result of economies of scale
  • ○

    A reduction in the number of staff needed to perform certain roles within the company
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    The company will not be able to buy in bulk at a discount in the future
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    The company will not be able to maximise efficiency due to rapid business growth
  • ○

    It will not experience the benefits of economies of scale
Question 6

TrowPlan Ltd. is planning on growing their business through expanding their real estate holdings. In order to do this, they have taken out a bank loan of £2 million. This loan is to be repaid by TrowPlan Ltd. over a period of

14 years with an interest rate of 10%. However, there are rumours of recession in the banking sector, and the economic uncertainty caused by Britain's vote to leave the EU continues to decrease the value of pound

sterling.

In these circumstances, which of these options would be the least suitable course of action for TrowPlan Ltd. to take?

Select ALL that apply.

Select all that apply, then click Submit answer.

  • ○

    Take out the loan without any guarantee or security so as to see whether interest rates lower in the near future
  • ○

    Take out an interest rate guarantee and wait until the economic situation becomes clearer before taking out a Forward Rate Agreement
  • ○

    Take out a Forward Rate Agreement to fix the interest rate repayable on the £2 million loan
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    Take out an interest rate option and wait to buy an interest rate future until the economic situation becomes clearer
  • ○

    Buy an interest rate future in order to fix the interest rate repayable on the £2 million loan