A rise in government expenditure can lead to
Higher inflation
Higher unemployment
Lower profits for industries
Lower importation of raw materials by industries
Correct answer is A
Increased government spending invariably means increasing the money supply in the country. Excess money in circulation can lead to inflationary tendencies.
When governments wants to discourage consumption, they tax goods whose demand is
Price inelastic
Abnormal in nature
Price elastic
Normal in nature
Correct answer is C
Taxation reduces the purchasing power of the people and it reduces their consumption. The decline in consumption leads to decrease in effective demand for the goods and services, which in turn affects the production of these commodities.
Government tax goods whose price is elastic. This means that, when there is an increase in price as a result of high taxation, the quantity demanded of the goods will reduce.
One profitable form of business undertaken by the commercial banks is
The issuing of cheques
The payment of standing order
Lending money to borrowers
Accepting cheques from customers
Correct answer is C
Lending money to borrowers is one profitable business undertaken by the commercial banks. These banks lend money to borrowers and charge interest for the amount lend for the duration of the loan. The interest paid by borrowers is the lender's (bank) is the profit.
Deposit held in a commercial bank are part of
Money supply
Transfer payments
Ordinary shares
Treasury bills
Correct answer is A
Commercial bank refers to a financial institution that accepts deposits, offers cheque account services, makes various loans etc. The deposits of commercial banks make up part of the money supply in an economy, which is the total amount of money in circulation or in existence in a country.
Cost push inflation is caused by a
Rise in the cost of production
Decrease in the transportation cost
Rise in demand for goods
Decrease in the cost of production
Correct answer is A
Cost-push inflation occurs when overall prices increase due to increases in the cost of wages and raw materials. An increase in the cost of wages and raw materials means high cost of production. This will cause the prices of goods to rise.