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CSEET (CS Entrance) Understanding Economic Systems and Business — practice questions — page 2

Explore 51 free Understanding Economic Systems and Business questions in CSEET (CS Entrance) Business Environment. Open each question or exercise to read its content, reference answers and available explanation.

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Understanding Economic Systems and Business questions and exercises with answers

Showing questions 31–51 of 51.

Purchasing power is a function of which two things?Read the answer and worked solution →A basket of groceries rises in price from 30 to 40 while a shopper's salary stays the same. By how much has purchasing power fallen?Read the answer and worked solution →What causes demand-pull inflation?Read the answer and worked solution →What triggers cost-push inflation?Read the answer and worked solution →A union wins a large wage rise, carmakers lift prices, and workers elsewhere then demand higher pay. What is this called?Read the answer and worked solution →Which two groups does inflation penalise most directly?Read the answer and worked solution →Which two tools does a government mainly use to reach its macroeconomic goals?Read the answer and worked solution →What is fiscal policy?Read the answer and worked solution →Government spends more on public transport and households spend less on private transport. What is this called?Read the answer and worked solution →What is the national debt?Read the answer and worked solution →What is demand?Read the answer and worked solution →What is supply?Read the answer and worked solution →What is the point of equilibrium in a market?Read the answer and worked solution →Which change shifts a demand curve to the right?Read the answer and worked solution →Which change shifts a supply curve to the left?Read the answer and worked solution →What defines the market structure of an industry?Read the answer and worked solution →What is a pure monopoly?Read the answer and worked solution →What are barriers to entry?Read the answer and worked solution →Which of these is given as an example of a pure monopoly?Read the answer and worked solution →Which two characteristics define an oligopoly?Read the answer and worked solution →What is a strategic alliance?Read the answer and worked solution →

Worked practice questions

Purchasing power is a function of which two things?

  1. Interest rates and the level of employment
  2. Inflation and the income that a person earns
  3. Taxation and the savings a household holds
  4. Wages and the exchange rate of the currency
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Correct answer: B. Inflation and the income that a person earns

1. Purchasing power is the value of what money can buy. 2. It is a function of two things, inflation and income. 3. If incomes rise at the same rate as inflation, purchasing power does not change. 4. If prices rise while income does not, a given amount of income buys less and purchasing power falls. 5. Interest rates, taxes and exchange rates affect households but are not the two variables in this relationship. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.4 Macroeconomics: The Big Picture_

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A basket of groceries rises in price from 30 to 40 while a shopper's salary stays the same. By how much has purchasing power fallen?

  1. By 10 percent
  2. By 15 percent
  3. By 25 percent
  4. By 33 percent
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Correct answer: C. By 25 percent

1. Purchasing power depends on inflation and income together, and here income has not moved. 2. The same 30 that once bought the whole basket now buys 30 worth of a basket priced at 40. 3. That is 30 divided by 40, so the shopper can buy only 75 percent as many groceries as before. 4. The shortfall is the missing 10 out of the new price of 40. 5. Ten divided by forty is 25 percent, so purchasing power has declined by 25 percent. 6. Reading the fall as 10 percent mistakes the money amount of the rise for a percentage. 7. Dividing the rise of 10 by the old price of 30 gives 33 percent, which measures the price increase rather than the loss of purchasing power. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.4 Macroeconomics: The Big Picture_

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What causes demand-pull inflation?

  1. Production costs rise and push up the prices of final goods
  2. Demand for goods and services runs ahead of the supply
  3. Supply of goods and services runs ahead of the demand
  4. Wages are held down while the money supply is tightened
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Correct answer: B. Demand for goods and services runs ahead of the supply

1. Demand-pull inflation occurs when demand for goods and services is greater than the supply. 2. Would-be buyers have more money to spend than the amount needed to buy the goods available. 3. That excess demand pulls prices upward, a situation described as too much money chasing too few goods. 4. Rising production costs pushing up prices is cost-push inflation, the other type. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.4 Macroeconomics: The Big Picture_

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