Professional Documents
Culture Documents
16-Sep-19
19:47:07
1 Generally, quantity supplied and price: Topic 1
Exp The objective of the producer is to make a profit from the item. Hence, the higher the price, the more the
producer is willing to supply. The quantity supplied is therefore positively related to price.
2 Generally demand curve is: Topic 1
A upward-sloping. Chapter 1
B downward-sloping. Section 1
C flat. QID 8
Exp Generally, the higher the price for the item, the lower the quantity demanded for it will be, and vice versa.
Quantity demanded is therefore inversely related to price. Thus, demand curve is generally shown as
negatively sloped curve.
3 Which factor most likely determines the supply of goods and services? Topic 1
Exp The objective of the producer is to make a profit from the item. Hence, the most important factor, from the
producer’s perspective, is the price that can be obtained from selling the item.
4 What's the condition for equilibrium price? Topic 1
D When the quantity supplied equals the quantity demanded. Ans D Hot
Exp The price at which quantity supplied equals quantity demanded at any given time is the “equilibrium”
price for that item.
Exp Price of the goods and services affects supply and demand. Level of income and Preferences and trends
affect demand. Thus, these four options will affect supply and demand curve.
6 What will the quantity demanded and supplied change if the price of the commodity increases? Topic 1
Exp Quantity demanded is inversely related to price. Thus, quantity demanded decreases when the price of
the commodity increases. Oppositely, the quantity supplied is positively related to price. Thus, quantity
supplied increases when the price increases.
7 Generally, quantity demanded and price: Topic 1
Exp Generally, the higher the price for the item, the lower the quantity demanded for it will be, and vice versa.
Quantity demanded is therefore inversely related to price.
8 What will the quantity demanded and supplied change if the price of the commodity decreases? Topic 1
Exp Quantity demanded is inversely related to price. Thus, quantity demanded increases when the price of the
commodity decreases. Oppositely, the quantity supplied is positively related to price. Thus, quantity
supplied decreases when the price decreases.
Exp The willingness of consumers to purchase an item is influenced by various factors while price is generally
the most important factor.
10 Economic sectors include: Topic 1
I. household sector
II. business sector
III. government sector
IV. overseas sector
A I, II, III Chapter 1
B I, III, IV Section 2
Household sector; Business sector; Government sector; Overseas sector; Finance sector.
11 The business sector mainly functions as: Topic 1
I. fund providers
II. fund seekers
III. buyers of goods and services
IV. sellers of goods and services
A I, III Chapter 1
B I, IV Section 2
Exp Business sector consists of the producers of goods and services. This sector also requires funds to
produce goods and services, and the sector is therefore mainly made up of fund seekers (borrowers).
12 If a government has a budget surplus, it is more likely to be a: Topic 1
Exp Whether a government is a fund seeker or a fund provider depends on its overall budgeting position – if in
surplus, it is a fund provider.
Exp Whether a government is a fund seeker or a fund provider depends on its overall budgeting position – if in
deficit, it is a fund seeker.
14 If a government issues bonds, Topic 1
A it becomes a fund provider, providing funds for household and business sector. Chapter 1
B it becomes a fund seeker, raising money from household and business sector. Section 2
C it becomes a fund provider, raising money from household and business sector. QID 21
D it becomes a fund seeker, providing funds for household and business sector. Ans B Hot
Exp A government requires funds to meet its economic, political and social objectives (such as provision of
hospitals, schools and roads), and is primarily a fund seeker.
15 Which sector most likely facilitate the transfer of funds between fund providers and seekers? Topic 1
Exp Finance sector includes the financial intermediaries and institutions that facilitate the transfer of funds
between fund providers and seekers, and is therefore both provider and seeker.
16 Which of the following sector is more likely to be a fund provider? Topic 1
Exp Business sector consists of the producers of goods and services. Businesses require funds to produce
goods and services, and the sector is therefore mainly made up of fund seekers (borrowers).
17 The household sector mainly functions as: Topic 1
I. fund providers
II. fund seekers
III. buyers of goods and services
IV. sellers of goods and services
A I, III Chapter 1
B I, IV Section 2
Exp Household sector consists of the consumers of goods and services. It is also referred to as the retail
sector. The household sector spends and invests money, and mainly consists of fund providers (lenders).
Exp The role of intermediaries is to channel the flow of funds between the borrowers and lenders. Therefore,
indirect financing, or intermediation, occurs when the needs of borrowers and lenders do not match.
19 What is the advantage of intermediation? Topic 1
Exp Intermediaries are compensated for assuming the risk involved by receiving a fee (brokerage or
commission) or by charging higher rates to borrowers than they pay to lenders.
20 What is the influence of globalization? Topic 1
I. Investors have more suitable investment opportunities.
II. Investors have opportunity to gain higher return.
III. The rapid growth of financial products
IV. Global financial markets are getting more volatile.
A I, II, III Chapter 1
B I, III, IV Section 4
C III, IV QID 25
Exp Under Globalization, investment is being unrestricted by national borders. Capital-exporting countries can
earn higher return by providing services to capital-importing countries. International capital flows grew
but it’s getting instable.
21 What is the impact of globalization on correlation among global financial markets? Topic 1
Exp According to the International Monetary Fund(“IMF”),The net capital flows to emerging market economies
have demonstrated higher volatility than those to advanced economies, and a stronger correlation to
changes in global financing conditions.
Exp Bank for International Settlements is perceived as a bank for central banks in the international financial
market.
23 Which of the following function does the World Bank has? Topic 1
B Invest in member countries and facilitate the economic development of member countries Section 5
Exp The World Bank help each developing country onto a path of stable, sustainable and equitable growth.
Option A is the function of The BIS while option C and option D are the functions of The IMF.
24 Which of the following is not included in supranational organizations or multilateral agencies? Topic 1
Exp The main purpose of the IMF is to provide a forum for cooperation on international monetary problems; to
promote exchange rate stability; to lend countries foreign exchange when needed; and to facilitate the
growth of international trade.
B I, II, IV Section 5
C I, III, IV QID 31
Exp The BIS is an organization that promotes international cooperation among central banks and other
agencies to achieve monetary and financial stability. Maintenance of exchange rate stability is one of the
missions of IMF.
27 Which of the following is not the function of IMF? Topic 1
Exp The main purpose of the IMF is to provide a forum for cooperation on international monetary problems; to
promote exchange rate stability; to lend countries foreign exchange when needed; and to facilitate the
growth of international trade.
28 The major goals of World Trade Organization include: Topic 1
I. to arbitrate trade disputes between countries
II. to lower trade barriers
III. to lower unemployment rate
IV. to consolidate trade quota
A I, II, III Chapter 1
B I, III, IV Section 5
C I, II QID 33
Exp The WTO is an international organization dealing with the global rules of trade between nations. Its main
function is to ensure that trade flows as smoothly, predictably and freely as possible.
29 The functions of Bank for International Settlements include: Topic 1
I. Promoting discussion and facilitating collaboration among central banks
II. Supporting dialogue with other authorities that are responsible for promoting financial stability
III. Acting as a prime counterparty for central banks in their financial transactions
IV. Serving as an agent or trustee in connection with international financial operations
A I, II Chapter 1
Exp The BIS fulfils this mission by:(1)promoting discussion and facilitating collaboration among central
banks;(2)supporting dialogue with other authorities that are responsible for promoting financial
stability;(3)conducting research on policy issues confronting central banks and financial supervisory
authorities;(4)acting as a prime counterparty for central banks in their financial transactions;
and(5)serving as an agent or trustee in connection with international financial operations.
B I, II Section 6
Exp M2 consists of savings and time (term) deposit accounts with licensed banks while M3 consists of M2.
31 Narrow money represents: Topic 1
A M0 Chapter 1
B M1 Section 6
C M2 QID 36
D M3 Ans B Hot
Exp M1 consists of all notes and coins in circulation and customers' demand deposits placed with licensed
banks (the authorized institutions in Hong Kong under the Banking Ordinance). It is collectively known as
“narrow money”.
32 Broad money represents: Topic 1
A M0 Chapter 1
B M1 Section 6
C M2 QID 37
D M3 Ans D Hot
Exp M3 consists of M2 plus deposits in other financial institutions. It is collectively termed “broad money”.
33 The major functions of currency include: Topic 1
I. Means of storing wealth
II. a path to increase wealth
III. unit against which to value other goods and services
IV. medium of exchange
A I, II, III Chapter 1
B I, III, IV Section 6
C I, II, IV QID 34
Exp Money plays an important role in the financial system. Money acts as a
-means of storing wealth
- medium of exchange
-unit against which to value other goods and services.
B I, II Section 6
C III, IV QID 38
Exp M1 consists of all notes and coins in circulation and customers' demand deposits placed with licensed
banks (the authorized institutions in Hong Kong under the Banking Ordinance).Option III and option IV are
classified as M2.
35 all notes and coins and customers' demand deposits placed with licensed banks belong to which types of Topic 1
the following money?
I. M1
II. M2
III. M3
IV. M4
A I Chapter 1
B I, II Section 6
Exp M1 consists of all notes and coins in circulation and customers' demand deposits placed with licensed
banks. Meanwhile, M2 consists of M1 and M3 consists of M2.
36 Deposits in other financial institutions belong to which type of the following money? Topic 1
I. M1
II. M2
III. M3
IV. M4
A I, II, III, IV Chapter 1
B III, IV Section 6
Exp M3 consists of M2 plus deposits in other financial institutions. It is collectively termed “broad money”.
C I, II, IV QID 43
Exp Banks are financial intermediaries and they have an important role in facilitating the flow of funds in the
banking system by performing the following functions:
1.Mobilization of funds
2.Investment opportunities
3.Implementation of monetary policy
38 Money needs to be: Topic 1
I. storable
II. portable
III. durable
IV. hard to obtain
A I, II, III Chapter 1
C I, III, IV QID 35
Exp In order to fulfil its functions, money needs to be durable, storable and portable.
39 Money plays an important role in the financial system which includes: Topic 1
I. medium of exchange
II. unit against which to value other goods and services
III. means of storing wealth
IV. keeping constant purchasing power perpetually
A I, II, III, IV Chapter 1
Exp Money plays an important role in the financial system. Money acts as a
- means of storing wealth
- medium of exchange
- unit against which to value other goods and services.