UNIT VII The role of government ‘TIME ALLOWED — QUESTION INUTES PER 1. The role of government includes its ability to 1, maintain full employment, Hi, stabilize prices. TH, improve the standard of living. IV, maintain balance of payments equilib- (A) Land TE only {B) 11, Il and IV only (C) I, Wand IV only (D) All of the above 2. A nation’s economic prosperity is best, measured by the (A) number of persons who own cars, (B) number of its hotels and tourist resorts. (©) percentage of the working popalation to fotal population {D) amount of goods and services per person produced in a year. 3, ‘The economic activities of government in a mixed economy include all of the following EXCEPT the (A) control of ail the country's productive resources. (B) supplementation and modification of price system, (©) redistribution of income. (D) stabilization of the economy. 4. The continual rise in the price level of an * economy is termed (A) deflation. {B) depression. {C) inflation. {D) recession. During periods of rising prices, one method of reducing prices could be to (A) decrease personal income tax. (B) increase government expenditure. {C) increase the available supply of goods. (D) lower the interest rate on bank loans. ‘The immediate effect of inflation is (A) a fallin the parchasing power of money (B) an inctease in blackmarketing. (C) an inctease in the volume of production, (D) increased savings by institutional. inves- tors, Which type of inflation points to changes in the Jevel of demand for consumer and capital goods as the main cause of rising prices? (A) Cost-push inflation (B) Demand-pull inflation (©) Hyperinflation (D) Suppressed inflation Cost-push inflation eccurs whea there is an increase in the (A) cost of consumer goods. ° (B) prices of factors of production. (C) purchasing power of the country’s currency (D) volume of production. Which one of the following is NOT an adverse effect of inflation? (A) Less competitive nature of country’s Products in world markets due to high prices (B) A fallin the value of money (C) A reduction in the standard of tiving (D) Production geared towards. satisfying excess demand10. Which of the following factors are used by government to ensure consumer protection? 1. Prive controls Hi. Food and drugs standards UL. Establishment of monopolies IV. Rite purchase legislation (A) Lonly (B} 1, Wand IV only (C) Ti, Mand FV only (D) 1, 1, UI and IV. 11. Legislation which has been passed to ensure consumer protection includes 1, Sale of Goods Act. Ti, Weights and Measures Act. IL, Food and Drugs Act. TV. Hire Purchase Act: (A) 1 and Ht only 3) and IV only (©) Hf, IIL and IV only (D) 1,1, i and IV 12. Which one of the following is NOT related to the Sale of Goods Act? The Sale of Goods Act gives the buyer the right to refuse the goods or claim damages from the seller when (A) the name or description of the goods is not the description of the goods ordered. (B) the seller makes false or misleading statemeats about his goods. (C) mest of the goods sold by sample differ from the sample (D) the article cannot do the work for which it is usually used. 13, twas found that Jones & Co. Honey Producers used the trademark of Honeycom Enterprises, Which of the foltowing acts has been violated? (A) Hire Purchase Act (B) Sale of Goods Act (C) Trade Descriptions Act (D) Weights end Measures Act 14, MrBrown bought a TV set and had already paid three-quarters of the purchase price when it was repossessed by the company as his instalments were two months in arrears. Which of the following is the BEST course of action tor Ms Brown t9 take under Hire Purchase law? (A) Buy another TV sct that he can pay cash for from another company 15, 16. a7. 8. (B) Sue the company to reclaim all the payments made iby him (C) Report the matter to a consumers’ association” (D) Pay the instalments in arrears and ask the company to return the set Which of the following are features ofthe Trade Descriptions Act? ° I. False and misleading statements about goods and services are deemed to be illegal HL, Fe makes it legal for one firm to use the trademark of another fic IEL, [cis unlawful for 2 seller fo reclaim goods on which one-third of the purchase price bas been paid unless by order of the court TV. Pre-packed foods must show on the packets dates of production or dates by Which they should be used {A) [and TE only (B) Hand HE only (©) I, Wand IV oniy (D) 1,1, TH and IV ‘A wademark which notifies the consumer that a product is of a consistently high. quatity is called a (A) brand name. (B) guarantee. () label (D) seat of approval Mrs Smith paid for a plate of food in a restaurant but realized that it was cold and sour and that the meat was tainted. She complained jut was ignored by management. What should Mars Smith do? (A) Demand the return of her money (B) Report the incident to the Consumer Protection Association (C) Quote the terms of the Trade Descriptions Act to the proprietor (D) Take a sample of the food to the Government Chemical Analyst Which of the following operations are carried out by government chemaicaF analysts? I. Investigation of misleading“ advertise- ments Ul, Testing content and quality to determine sshether goods are marketable UL. Specifying the types of labels to be used on productswv. 2. D, IV. Advertising high quality produets (A) Land Tonly 3) LL and THE only {C) 1, Hand Hi only (D) Mi, HIT and TV only Which one of the following organizations is regponsible for determining the films to be shown or books 0 be sold within a country? (A) Censorship board (B) Consumer association {C) Government information services (D) Standards bureau ). Government can control or influence business activity through 1, legislation. Wi. taxation. il. nationalization. IV. price controls and subsidies. (A) Th only (B) Tand 111 oaly {C) 11, Mand IV only (D) 1, Wand 1V ‘Taxation is necessary because it helps government to (A) budget to meet the expenditure associated with the provision of ‘essential services. (B) utitize some of the extra money’ that the citizens cam. (©) force, the citizens 10 produce more by ‘working more overtime hours. (D) force the unions wo bargain for higher wages for their members. Which of the following are economic effects of taxation? I. Workers may feel disinclined to work oversime U1, Finns will be encouraged to make greater savings ‘Taxes on profits are regarded as acheck om enterprise Resources may move from the moze heavily to the more lightly taxed forms of production (A) 1, Hand U1 only (B) 11, IL and IV only (©) 1, Wend LV only (D) 1.01, MM and IV 1, IV. 23. 25. 26. Disposable income is (A) income before tax. > {B) the same as gross income. (C) the same as net pay. {D) income that mezsures purchasing power. _ Redistribution of income is designed to (A) equalize taxes on incomes. (B) allow special agencies to be responsible for the payment of salaries (©) ensare that people can their income, : () promote the general economic welfere of the citizens: pay taxes out of Government may achieve redistribution of income by 1. a system of taxetion bearing more beavily ‘on the richer members of the society. IL, increasing the wages of government minis- ters and civil servants. ‘ho provision of benefits for needier mem- bers of the society. implementing price controls to ensure that jncomies bave more purchasing power. (A) Toaly (B) [and Hl only {C) Land Hl only {D) 1, hand LY only mm. WwW. ‘The government may BEST be able to redistribute income through the ixaposition of (A) higher consumption taxes. (B) progressive income tox (C) taxes on luxury goods {D) price control on essential food items. A budget is best described as (A) a list of expenditure made the previous year. (B) anestimate of expected income anda plan for expenditure. (C) @ means of raising money for necessary expenditure. (D) a plan for purchasing the best quality ‘goods at the lowest prices. |. Within zecent years, the budget has been used as an instrament of economic policy 0 1. stimulate recovery from s trade recession. TI. assist the balance of payments. %29, 30, 3h, 2 33 TIL. ensure that citizens pay theit taxes. TV. reduce inequality of incomes. {A) I, Hand Ui only ) TE, BH and 1V only (C) T, Mand FV only (D) Hand TV only PAYE is a system of collecting (A) outstanding debts. (B) subsidies. (C) taxes. (D) wages. Income tax is calculated op the {A arose pay of he cmplaye, (B) gross pay minus ‘free pay’. (©) net income of the employee. {D) gross pay minus national insurance and union dues. Income tax is deducted from the income of all workers (A) employed by a firm for over one year. (B) who receive a monthly salary. {C} whose incomes exceed their non-taxable allowances. (D) who have no dependent relatives. ‘The documentation used slong with special tax tables to determine mn employee's tax deductions is the (A) code ‘number. (B) clock card number. (C) national identification number. (D) national registration number. Which of the following are direct taxes? I. Income tax TE Property tax Il. Corporation tax IV. Sales tax (A) 1, Hand Ul only (B) If, 11 and TV only (C) I and I only (D) Land IV only Which type of tax is paid out of and based on income or profit eamed by individuals or business organizations? (A) Ad valorem tax (B) Direct tax 3. 39. 40. .. The incidence of a i (©) Indirect tex. (D) Proportional tax . Which one of the followizig disadvantages is NOT related to direct taxation? (A) Difficulty in determining taxable income (B) Affects incentives adversely {(C)} High cost of collection (D) Increases prices paid by customers afd therefore inflationary Which one of the following is NOT an indirect tax? (A) Betting tax (B) Import duty (©) Stamp duty (D) Value added tax ‘Which one of the followingis NOT an advantage of indirect taxes? (A) Easy to collect B) Etfective economic regulators (C) Simple to administer (B) Progressive in their incidence ct tax is (A) on the person who actually pays it, {B) law of term during the year the tax must be paid, (C) the progressive or repressive nature of the tax (D) the percentage levied on taxable income. On which of the following taxes will the incidence depend on the elasticity of demand forthe commodity on which the taxis imposed? (A) Income tax (B) Property tax (C) Corporation tax (D) Value added tax Which of the following are social Services provided by government? I. Agricultural credit Hi, Health and sanitation tecilities IM]. Reads and transportation IV. Education and training {A) Lonly (B) I, Ul and IV only (C) I, Wand 1 only (D) EH, Mand Vv