A. adds consumption expenditures, investment expenditures, government expenditures, interest payment and wages.

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1 Commerce 1. The expenditure approach to tabulating GDP: Question options: A. adds consumption expenditures, investment expenditures, government expenditures, interest payment and wages. B. adds up the total amount spent on newly produced domestic goods and services during the year. C. adds up the total value of all income earnings during the year. D. excludes investment expenditures because they yield consumption in the future. 2. Total income equals the dollar value of total output because: A. foreign trade is allowed. B. people spend all of their income in every period, so it must go somewhere. C. of the definition of GDP D. spending by one group represents income to the other group. 3. Total income RECEIVED by all factors of production is called: Question options: A. national income. B. personal income. C. disposable personal income. D. Gross domestic income. 4. What is the difference between nominal GDP and real GDP? Question options: A. Nominal GDP represents purchasing power while real GDP is measured in terms of current dollars. B. Nominal GDP is measured in current market prices while real GDP corrects for changes in the overall level of prices from year to year. C. Nominal GDP is computed by using the expenditure approach while real GDP is computed by using the income approach. D. Nominal GDP is the total value of output produced while real GDP is the amount per individual.

2 5. Which of the following statements is NOT TRUE about the use of GDP as a measure of national welfare? A. GDP is a useful measure of national welfare since it excludes non market transactions. B. GDP is limited as a measure of national welfare since it does not consider the amount of leisure time available to the nation's residents. C. GDP is limited as a measure of national welfare since it does not consider environmental quality. D. GDP is limited as a measure of national welfare since it does not account for labor market discrimination. 6. According to the circular flow of income and output, which of the following is NOT TRUE? Question options: A. Total income and total output must be equal. B. Goods and services flow in one direction and money payments flow in the other direction. C. In every economic transaction, the seller receives exactly the same amount that the buyer spends. D. Goods, services and money all flow in one direction since money pays for the goods and services. 7. When comparing per capita GDP across countries, GDP should be adjusted for: A. foreign exchange rates. B. purchasing power parity. C. the unemployment rate. D. population. 8. If real GDP increases in any year, we know that: A. nominal GDP must have risen. B. both inflation and output have increased. C. the output of goods and services produced this year has increased.

3 D. inflation has raised the value of output. 9. An increase in corporate income taxes would reduce: A. personal income. B. national income. C. net domestic product. D. gross domestic product. 10. san increase in social security benefits will make: A. national income larger. B. national income smaller. C. personal income larger. D. net domestic product smaller. 1. A 2. D 3. B 4. B 5. A 6. B 7. B 8. C 9. B 10. C The fundamental economic problem faced by all societies is:

4 a. unemployment b. inequality c. poverty d. scarcity 12. "Capitalism" refers to: a. the use of markets b. government ownership of capital goods c. private ownership of capital goods d. private ownership of homes & cars 13. There are three fundamental questions every society must answer. Which of the following is/are one of these questions? a. What goods and services are to be produced? b. How are the goods and services to be produced? c. Who will get the goods and services that are produced? d. All of the above 14. If you were working full-time now, you could earn $20,000 per year. Instead, you are working parttime while going to school. In your current part-time job, you earn $5,000 per year. At your school, the annual cost of tuition, books, and other fees is $2,000. The opportunity cost of completing your education is: a. $2,000 b. $5,000 c. $17,000 d. $20,000 e. $22,000

5 15. The bowed shape of the production possibilities curve illustrates: a. the law of increasing marginal cost b. that production is inefficient c. that production is unattainable d. the demand is relatively inelastic 16. You have taken this quiz and received a grade of 3 out of a possible 10 points (F). You are allowed to take a second version of this quiz. If you score 7 or more, you can raise your score to a 7 (C). You will need to study for the second version. In making a rational decision as to whether or not to retake the test, you should a. always retake the quiz b. consider only the marginal benefits from of retaking the quiz (four extra points) c. consider only the marginal opportunity costs from taking the quiz (the time spent studying and taking the quiz) d. consider both the marginal benefits and the marginal opportunity costs of retaking the quiz 17. The law of demand states that: a. as the quantity demanded rises, the price rises b. as the price rises, the quantity demanded rises c. as the price rises, the quantity demanded falls d. as supply rises, the demand rises 18. The price elasticity of demand is the: a. percentage change in quantity demanded divided by the percentage change in price b. percentage change in price divided by the percentage change in quantity demanded c. dollar change in quantity demanded divided by the dollar change in price

6 d. percentage change in quantity demanded divided by the percentage change in quantity supplied 19. Community Colleges desired to increase revenues. They decided to raise fees paid by students with Bachelors degrees to $50 per unit because they believed this would result in greater revenues. But in reality, total revenues fell. Therefore, the demand for Community College courses by people with Bachelors degrees must have actually been: a. relatively inelastic b. unit elastic c. relatively elastic d. perfectly elastic 20. The demand for a product would be more inelastic: a. the greater is the time under consideration b. the greater is the number of substitutes available to buyers c. the less expensive is the product in relation to incomes d. all of the above Ans. 11 to D 12. C 13. D 14. C 15. A 16. D 17. C 18. A 19. C 20. C

7 31. In the case of agriculture, a. the demand has shifted to the right more than the supply has shifted to the right b. the demand has shifted to the right less than the supply has shifted to the right c. the demand has shifted to the left more than the supply has shifted to the left d. the demand has shifted to the left less than the supply has shifted to the left 32. The agricultural price support program is an example of a. a price ceiling b. a price floor c. equilibrium pricing 33. If there is a price floor, there will be a. shortages b. surpluses c. equilibrium 34. If there is a price ceiling, there will be a. shortages b. surpluses c. equilibrium 35. If there is a price ceiling, which of the following is NOT likely to occur? a. rationing by first-come, first-served b. black markets

8 c. gray markets d. sellers providing goods for free that were formerly not free 36. The goal of a pure market economy is to best meet the desires of a. consumers b. companies c. workers d. the government 37. In a pure market economy, which of the following is a function of the price? I. provide information to sellers and buyers, II. provide incentives to sellers and buyers a. I only b. II only c. both I and II d. neither I nor II 38. In a market system, sellers act in interest, but this leads to behaviors in interest. a. self; self b. self; society s c. society s; society s d. society s; self 39. The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:

9 a. Total physical product begins to fall b. The marginal physical product rises c. The marginal physical product falls d. The average physical product falls 40. Why is the law of diminishing marginal returns true? a. specialization and division of labor b. spreading the average fixed cost c. limited capital d. all factors being variable in the long-run Ans. 31 to B 32. B 33. B 34. A 35. D 36. A 37. C 38. B 39. C 40. C 41. Accounting is? (A) An Art (B) A Science _

10 (C) A Profession (D) All of these 42. The Institute of Chartered Accountants of India was established in the year (A) 1947 (B) 1949 (C) 1951 (D) Accounting Standard Board issuing Accounting Standards in India belongs to- (A) Ministry of Finance (B) Company Law Board (C) The Institute of Chartered Accountants of India (D) None of the above 44. Which of the following Accounting Standards relates to accounting for fixed assets? (A) AS 3 (B) AS 10 (C) AS 14 (D) AS 16

11 45, Which of the following statements is true? (A) Accounting and Bookkeeping are synonymous (B) Book-keeping and Accounting are complementary to each other (C) Accounting starts from where Book-keeping ends (D) Both (B) and (C) 46. The Generally Accepted Accounting Principles (GAAP) aim at- (A) Uniformity in accounting practices (B) Uniform accounting practices in all enterprises (C) Acceptance of globalisation, liberalisation and privatisation in the field of accounting (D) All of the above 47. Revenue is realized (A) when sales order is received (B) when goods are sold (C) when cash is received (D) when goods are received by

12 the purchaser 48. Personal Account relates to- (A) Persons (B) All artificial and natural persons (C) Representative Personal Accounts (D) All of the above 49. The cost of erection of an old machine will be posted in the credit side of (A) Cash Account (B) Machinery Account (C) Repairs and Renewal Account (D) None of the above 50. Outstanding Wages is (A) Nominal Account (B) Real Account (C) Personal Account (D) Current Account

13 51. Adjustment Entry for rent received in advance would be (A) Cash A/c Dr, To Rent Received in Advance A / c (B) Cash A/c Dr. To Rent A / c (C) Rent A/c Dr. To Rent Received Advance A/ c (D) Advance Rent A / c Dr. To Rent A / c 52. Accounting treatment of a Capital Expenditure as Revenue Expenditure creates (A) General Reserve (B) Revenue Reserve (C) Capital Reserve (D) Secret Reserve 53. Partnership comes into existence through (A) Introduction (B) Promotion (C) Contract (D) Situation ;

14 54. Partnership Deed is always? (A) Written (B) Oral (C) Written or Oral (D) Written and Oral 55. The number of partners in a partnership firm is- (A) Uncertain (B) Unlimited (C) Decided by partners (D) Limited 56. ln the absence of partnership agreement the profit is shared by the partners- (A) equally (B) on the basis of capital invested (C) on the basis of decision of the court (D) on the basis of time spent 57. At the time of admission of a

15 new partner the capital brought by him is shared among existing partners - (A) equally (B) on me basis of capital of the older partners (C) on the basis of sacrifice done (D) untrue statement 58. Because of Retirement / Death of a partner-~ (A) Partnership is dissolved (B) Partnership firm is dissolved (C) Partnership and partnership firm both are dissolved (D) None of the above 59. The minimum amount called on application for issue of shares is of face value. (A) 5% (B) 25% (C) 30% (D) 40%

16 60. Shares can be issued- (A) At par (B) At discount (C) At premium (D) All of the above Ans 41. To d 42. b 43. c 44. b 45. d 46. d 47. b 48. d 49. a 50. c 51. c 52. d 53. c 54 c 55. d 56. a 57. d 58. a

17 59. a 60. d 61 What is the parol evidence rule? a) The parol evidence rule provides that a party may never adduce evidence that seeks to add to, vary or contradict the content of a written document. b) The parol evidence rule presumes that a written document contains all the terms of a contract, but there are situations where this presumption can be rebutted and a party will be permitted to adduce evidence that adds to, varies or contradicts the content of a written document. c) The parol evidence rule provides that parties are free to adduce evidence that seeks to add to, vary or contradict a written document. d) The parol evidence rule provides that an oral contract is not usually binding. 62 The parol evidence rule is not absolute and is subject to a number of exceptions and qualifications. Which ONE of the following is not a valid exception or qualification? a) The courts will always allow extrinsic evidence to be adduced if the contract is contained in a deed. b) Where the court is of the opinion that the written agreement was not intended to represent the full extent of the agreement between the parties. c) Where the contract contains implied terms. d) Where there is evidence casting doubt on the validity of the contract. 63 There are various sources of implied terms. Regarding the implication of terms, which ONE of the following statements is untrue? a) Terms may be implied into a contract based on a particular trade usage or custom. b) Terms may be implied into a contract by statute. c) Terms may be implied by the court based upon the facts of the case. d) Terms may be implied into a contract if the parties have dealt with each other once before.

18 64 There are several differences between terms implied in fact and terms implied in law. Which ONE of the following statements provides a valid difference between the two types of implied terms? a) Terms implied in fact are based on the imputed intentions of the parties, whereas terms implied in law are not based on the intentions of the parties. b) Terms implied in fact are not subject to the parol evidence rule, whereas terms implied in law are. c) Where the court implied a term in fact, a precedent will be created so that a similar term will be implied into all similar contracts. Such a precedent is not set where a term is implied in law. d) Terms implied in law are always implied by statute, whereas terms implied in fact are implied by the courts. 65 Which ONE of the following is not a principle of Lord Hoffman's restatement? a) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. Accordingly, the courts should interpret the terms of a contract based solely on the words contained within it. b) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. c) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. d) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. 66 In relation to misrepresentation, which one of the following statements is true? a) Statements of opinion can never amount to a misrepresentation. b) A statement regarding a future course of conduct cannot amount to a misrepresentation. c) Silence cannot amount to a misrepresentation. d) Statements amounting to mere 'puffs' cannot amount to a misrepresentation. 67 What are the general remedies for innocent misrepresentation?

19 a) Rescission of the contract and the representee may also be able to claim an indemnity. b) Rescission of the contract and damages. c) Damages only. d) Rescission only. 68 In relation to negligent misrepresentation, which one of the following statements is untrue? a) In cases involving negligent misrepresentation under statute, there is no need to establish the existence of a 'special relationship.' b) The assessment of damages for negligent misrepresentation under statute is the same as for fraudulent misrepresentation. c) Negligent misrepresentation under statute will only occur in cases where the representor enters into a contract with the representeee. d) In cases involving negligent misrepresentation under the common law, the burden of proof is placed on the representor to establish that his representation was true. 69 Which one of the following statements provides an accurate description of a mutual mistake? a) A mutual mistake occurs where both parties have made the same mistake. b) A mutual mistake occurs where both parties have made a mistake, but they have made a different mistake. c) A mutual mistake occurs where one party is mistaken and the other party knows, or can be taken to know, of the mistake. d) A mutual mistake occurs where no actual mistake has occurred, but both parties later believe a mistake has occurred. 70 Which one of the following is NOT an example of common mistake? a) Mistake as to identity b) Mistake as to existence of the subject matter c) Mistake as to title

20 d) Mistake as to quality 71 Regarding mistake as to identity, which one of the following statements is true? a) A contract will be held void if the mistake relates to the attributes of a person. b) Where parties contract face-to-face, and one party is not who he claims to be, the general rule is that a mistake as to identity will not occur. c) Where parties contract face-to-face, and one party is not who he claims to be, the general rule is that a mistake as to identity will occur. d) Where parties do not contract face-to-face (e.g. by mail), and one of the parties is not who he claims to be, the general rule is that a mistake as to identity will not occur. 72 Which one of the following relationships DOES NOT give rise to a presumption of undue influence? a) Employer and employee b) Parent and child c) Trustee and beneficiary d) Doctor and patient 73 In relation to duress, which one of the following statements is true? a) Duress will only be present where one party physically threatens the person of another. b) The doctrine of duress is a creation of equity. c) The doctrine of duress only applies to property or the person, and has not been extended to cover economic or business interests. d) The presence of duress will render a contract voidable. 74 Which one of the following contracts is NOT an example of an illegal contract? a) A contract that purports to oust the jurisdiction of the courts. b) A contract requiring the commission of an unlawful act.

21 c) A contract that amounts to a legal wrong. d) A lawful contract that does not require the commission of an unlawful act, but results in a person benefitting from an unlawful act, should that unlawful act occur. 75 Which one of the following is NOT an example of a contract in breach of public policy? a) An agreement that adversely affects the institution of marriage. b) A contract that seeks to oust the jurisdiction of the courts c) A contract in restraint of trade d) A contract involving commercial dealings with the enemy during wartime. Ans. 61 to b 62. a 63. d 64. a 65. a 66. d 67. a 68. d 69. b 70. a 71. b 72. a 73. d 74. a 75. d

ECON 2301 TEST 1 Study Guide. Spring 2015

ECON 2301 TEST 1 Study Guide. Spring 2015 ECON 2301 TEST 1 Study Guide Spring 2015 Instructions: 40 multiple-choice questions, each with 4 responses You will have an hour to do the exam Students need to bring: (1) Sanddollar ID card; (2) scantron