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FORM TP 2016105 MAY/JT]NE 2016

CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE@
EXAMINATION
PRINCIPLES OF BUSINESS
Paper 01- General Proficiency
I hour 15 minutes

2s MAY2016 (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This test consists of 60 items. You will have t hour and 15 minutes to answer them.

In addition to this test booklet, you should have an answer sheet.

Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item
you are about to ans\ver and decide which choice is best.

-1 On your answer sheet. flnd the number which corresponds to your item and shade the space
having the same letter as the answer you have chosen. Look at the sample item below.

Sample Item

The money that a business receives from the sale

of goods or services is called its Sample Answer

(A)
(B)
assets
capital
A B
o@
(C) income
(D) resources

The best answer to this item is "income", so (C) has been shaded.

If you want to change your answer, erase it completely before you fill in your new choice.

When you are told to begin, turn the page and work as quickly and as carefully as you can. If
you cannot answer an item, go on to the next one. You may return to that item later.

- DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

-
- Copyright A 2014 Caribbean Examinations Council
---r All rights reserved.
- r,r1240010/F 2016
 -2-

6 Which of the following is NOT an activity in

1. The term 'trade'refers to
the planning process?
(A) the selling of goods and services
on the stock market
(A) Setting goals
(B) the movement of immigrants from
(B) Establishing policies
one country to another
(c) Identifying resources
(c) any commercial activity involving
(D) Delegating responsibility
the exchange of goods and
services
(D) the negotiation process between IIgd refers to the following information.
trade unions and management
Mr Lloyd, manager of LM Ltd holds
regular staffmeetings to listen to ideas from
employees before making decisions ftat
2. Which of the following types of business
u,ould affect the future of the company.
environments is MOST typical of the
Commonwealth Caribbean? 'What leadership style does
7 Mr Lloyd
(A) employ?
Corporate state
(B) Mixed economy
(c) Centrally planned
(A) Autocratic
(B) Democratic
(D) Perfectly competitive
(c) Charismatic
(D) Laissez faire

3 A to seek out
person who has the abiliry
and undertake the risk of nerr' business
8. Selecting the objectives and the proce&res
oppornrnities is referred to as
for achieving goals is referred to as
(A) a producer
(A) planning
(B) an inventor
(B) organizing
(c) a shareholder
(c) controlling
(D) an entrepreneur
(D) motivating

4. In a public limited company, the losses are

9 Which of the following demonstrates the
borne by the
characteristics ofa good leader?

(A) staff
(B) directors
I. Inspiring w'orkers
(c) community
II. Delegating responsibilities
(D) shareholders
III. Making intelligent decisions

(A) I and II only

(B) I and III only
5. In which ofthe fotlowing types ofeconomic
(c) II and III only
systems does the government make all
(D) I, II and III
decisions?

(A) Mixed
(B) Capitalist
(c) Command
(D) Subsistence

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 -J

r0. Under which of the following categories 15. Which of the following is NOT an example
would subsidizedmeals for employees fall? ofan unethical business practice?

(A) Fringe benefits (A) Money laundering

(B) Duty allowance (B) Nonpayment of taxes
(c) Wages and salaries (C) Misleading advertisements
(D) Workers' compensation (D) Retrenching inefficient workers

11 Which ofthe following activities ca:ried out 16. A post-dated cheque is one which
in a flrm will NOT be under the supervision
of the marketing manager? (A) was written no longer than six
months ago
(A) Packaging (B) is dated to agree with the date ofthe
(B) Purchasing document requesting payment
(C) Advertising (c) is dated for payment at a future date
(D) Distributing (D) is dated by the bank on the day the
cheque is presented for payment
12. An entrepreneur who wants to maintain
control of the business would be advised
17 Which of the following reasons can be used
to register the business as a
for voiding a contract?

(A) partnership
I. There was no consideration.
(B) sole ffader
(c)
il. There was no meeting of minds.
limited company
m. The agreement was not in writing.
(D) private limited company
(A) I and II only
13 Which of the following is a regulatory issue (B) I and III only
for the entrepreneu? (c) II and III only
(D) I, II and III
(A) Using a credit card to transact
business
(B) Offering hire purchase options to 18. A contract may be discharged by
customers
(cI Paying national insurance to the
(A) breach
government
(B) change of mind
(D) Advertising the business locally
(C) inconsideration
and regionally
(D) misappropriation

14. The MOST important use of collateral t9 Fred and his friends went to the cinema.
security to the lender is that it On his way out Fred fell and was injured.
What type of insurance would protect the
(A) establishes the financial position of owner of the cinema against claims made
the borrower by Fred?
(B) can be seized if the borrower fails
to pay (A) Industrial insurance
(C) improves the borrower's chance of (B) Public liability insurance
getting a loan (c) Fidelity guarantee policy
{D) gives the lender an idea of the state (D) Employers' liability insurance
of the business

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 -4-

20 Which of the following types of cheques 24. One feature of capital intensive flrms is that
allows an individual to receive cash on they
demand?
(A) raise large amounts of capital
(A) Open (B) provide capital for other flrms
(B) Crossed (c) use more machinery and less people
(c) Certified (D) use more people and less machinery
(D) Banker's

25 Which of the following conditions would

21. To which of the following industries does constitute a linkage between two industries?
a fi rm involved in food processing belong?
(A) Two firms manufacture similar
(A) Service goods.
(B) Extractive (B) Oneflrmsharestheuseofmachinery
(c) Constructive with another flrm.
(D) Manufacturing (C) Two firms are responsible for the
manufacture of different kinds
ofgoods.
22 Joseph has decided to leave his homeland (D) The output of one industry of the
of Jamaica to go to the USA in search of economy becomes the inPut of
a better life. This movement is referred to another industry'.
as

(A) brain drain 26. Which of the following resr:lts rs LEAST

(B) early migration likely to occur from gro*'th in an
(c) internal migration organization?
(D) external migration
(A) Greater productivitY
(B) More division of labour
IIem,23 refers to the following information. (C) Increased communication
(D) Increased capital inr-esment
Mr Jones receives a job offer from a
company in Barbados. In order to take up
this new job, Mr Jones decides to leave 27 Which of the follou'in,e commodius is a

his home country of Trinidad and move product of the manufacturing indusry?
permanently to Barbados.
(A) Cars
23 In Trinidad Mr Jones would be referred to (B) Gold
AS (C) Lumber
(D) Houses
(A) a refugee
(B) an emigrant
(c) an immigrant 28. The term 'loss leader'is BEST described
(D) a travelling officer as a product which

(A) has no real market value

(B) the retailer is unable to locare
(C) is sold cheaply to attract ctlstorrEs
(D) the retailer gives ar*-a1-to clrsto{x}ers

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rr11AAfr1 nttr )i1 A
 5

'ro Under which of the following conditions 34. In a Caribbean territory there is only one
is a trade discount used? supplier that provides electricity to all
homes, businesses and communities. What
(A) Bulk purchases market structure does this BEST illustrate?
(B) Prompt payment
(C) Payment by cash (A) Duopoly
(D) First-time buyers (B) Oligopoly
(c) Monopoly
(D) Perfect competition
30. Which of the following is NOT a terms of
sale?
35. Which of the following terms is associated
(A) Cash with a stock market?
(B) Credit
(c) Shares (A) Costs and prices
(D) Hire purchase (B) Risks and benefits
(c) Rent and investment
(D) Premium and reward
31. Which of the following factors is LEAST
likely to influence consumer behaviour?
35 Tom invests his savings by buying shares
(A) Product price in a company. From this investment Tom
(B) Brand loyalty expects to receive
(c) Quality of goods
(D) Place ofresidence (A) profits
(B) interest
(C) revenue
32 A situation where a business gains editorial (D) dividends
space without having to pay for it is called

(A) publicity 37 Mr Jones has several bills of fixed amounts

(B) marketing to pay each month. His bank agreed to pay
(C) advertising them monthly from Mr Jones' account. This
(D) discounting service, provided by the bank, is referred
to as

33 The price of an article is usually high when (A) an overdraft

there is a (B) a fixed deposit
(c) a standing order
(A) large quantity for sale and few (D) a letter of credit
people wanting to buY
(B) small quantity for sale and few
people wanting to buY 38. One of the MAJOR functions of a Central
(C) large quantity for sale and many Bank is to
people wanting to buY
(D) small quantity for sale and many (A) issue notes and coins
people wanting to buY (B) issue stocks and shares
(c) accept deposit accounts
(D) make loans and advances

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 -6-

Items 3qJ0 refer to the following diagram 42. Governments can influence business
which represents the market for pears. The activity positively by reducing
original demand curve is DD.
(A) taxes
v (B) glants
(c) spending
7 (D) subsidies
G
I 6
0)

L
5 43 Which of the following is NOT regarded
as a role of taxation?

3 (A) To raise revenue for governments

(B) To influence the distribution of
u incomes and wealth
I D (c) To influence the investment
decisions of publicly owned
x
0
1234567 8 enterprises
(D) To influence total expenditure on
Quantity of pears (000) goods and services

39. PontZ on the diagram represents the

44 Which of the following actions bY
(A) price govemment is MOST likely to lead to an
(B) demand improvement in the standard of living?
(c) equilibrium point
(D) equilibrium quantitY (A) Printing more money
(B) Increasing the income tax rate
(C) Abolishing taxes on low incomes
40. The equilibrium Price is (D) Giving tax incentives to businesses

(A) s0.00
(B) $3.s0 45. Which of the following statements
(c) s4.00 accurately describes taxation as a means
(D) $7.00 of redistributing incomes?

(A) The rich pay taxes and the poor do

41. Which of the following measures may be not.
used by government to protect consumers?
(B) Tax is used to distibute income
more efficiently throughout the
I. Price controls countrY.
[. Custom duties (C) Tax is usedto spread income evenly
m Provision of subsidies between the higher and lower
income earners.
(A) I and II only (D) Thehigherincomeearnersaretared
at a higher rate to provide benefi ts
(B) I and III only
(c) II and III only to lower income earners.
(D) I, II and III

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n 1r,{nnln/E ,nl6
#. Which of the following BEST explains a 49 Which of the following practices would
'proportional tax'? contribute to the economic growth and
development of a country?
(A) The rate oftax increases as income
increases. (A) Increasedimportationofconsumer
(B) The same rate of tax is paid at all goods
income levels. (B) Decreased use of the country's
(C) Higherincomeeamerspayasmaller natural resources
percentage of income in tax than (C) Exporting skilled personnel to
lower income earners. developed countries
(D) Lower income earners pay a larger (D) Provision of loans and technical
percentage of income in tax than assistance for establishing local
higher income earners. businesses

Item47 refers to the following inforrnation 50. Export licences are issued MAINLY to
which shows fi gures taken from a country's
balance of payments accounts. (A) encourage local businesses to
produce more goods for exPort
Goods Services
(B) enable the government to control
the flow ofgoods being exPorted
Exports $160 m $300 m (C) indicate to the importing country
Imports $120 m 5140 m that the goods are of a high
standard
47. The country's balance of trade is (D) indicate to the importing country
the price at which the goods are
(A) -$ 120 m to be sold
(B) +s 120 m
(C) -$ 200 m
(D) +$ 2oo m 51 A measure which limits the quantity of
goods thatcitizens of a country are allowed
to buy from overseas is known as an
48. In calculating Net National Product,
depreciation refers to the (A) import duty
(B) export dutY
(A) increase in the price level (C) export quota
(B) decrease in the Price 1evel (D) import quota
(C) decrease in capitai stock value
(D) increase in capital stock value
52 Which ofthe following does NOT contribute
to an improved standard of living of a countT/?

(A) An increase in capital goods

(B) An increase in disposable income
(c) An increase in the countrY's
population
(D) An increase in investment in
technology

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 -8-
53. Which of the following is an example of 57. The purpose of CARICOM is to
tariffs?
(A) allow member states to collaborate
(A) Excise duties (B) foster interregional trade and
(B) Property taxes common services
(c) Custom duties (C) encouragetheftansferoftechnology
(D) Value added taxes within the region
(D) allow for unrestricted movement
of persons among the territories
54 Visible hade examines the difference between
a country's 58 Which of the following o r garuzations would
settle a dispute among banana-producing
(A) imports and exports of goods only countries of the Caribbean and Central
(B) imports and exports of services only America over preferential agreement with
(c) current account and capital account the European Union?
(D) output method and expenditure
method (A) World Trade Organization (WTO)
(B) Caribbean Development Bank
(cDB)
53. The term 'economic dualism'refers to an (c) CARICOM Single Market and
economy in which one sector is Economy (CSME)
(D) Organization of Petroleum
(A) highly dependent on local capital Exporting Countries (OPEC)
(B) highly dependent on foreign capital
(C) overpopulated while the other is
59 In periods of inflation, the ability to raise
underpopulated
additional capital for expansion is MOST
(D) technologically advanced while the
likely to be a problem for
other is technologically retarded
(A) sole traders

50 Which of the following is a benefit of the

(B) partnerships

CSME?
(C) public companies
(D) multi-national corporations
(A) A common trade policy
(B) Reduced cost of housing 60 Industrialization is an important strategy
(c) Reduced cost of air travel in the fight against poveffy. Which of the
(D) More equitable distribution of income following is a benefit of an increase in the
development of industries?

(A) A reduction in the level of exports

(B) Areduction in the level of imports
(c) An increase in the level ofmigration
(D) An increase in the rate of
unemployment

END OF TEST

IF'YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORI( ON THIS TEST.

0r2400t01F 2016