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1.
For two substitute goods, the gross elasticity of demand is
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A.
greater than one but less than
B.
zero
C.
negative
D.
positive
E.
infinity
Explanation. Give a better Explanation
The higher the price of commodity ,A the higher the quantity Demanded of commodity B (A’.5 substitute). Hence the cross elasticity is positive.(D)


2.
If a person receives a higher wage than would be necessary to induce him to work, he is said to be receiving
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A.
rent
B.
profit
C.
interest
D.
gain
E.
moratorium
Explanation. Give a better Explanation
Moratorium is an inducement or grace received without actually working for it. (E)


3.
Which of this is likely to be inflationary
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A.
tax increase
B.
budget surplus
C.
increase in unemployment
D.
wage increase
E.
increase in labour supply
Explanation. Give a better Explanation
An increase in wage will increase the purchasing power of consumers and invariably the aggregate demand, it will tend to increasing price level(inflation)if not matched with increase in production. (D)


4.
A characteristic of a debenture is that
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A.
its yield is based on profits
B.
its yield is fixed rate of interest
C.
it has no redemption date
D.
there is a voting when interest is paid
E.
its interest is variable
Explanation. Give a better Explanation
Debenture is a loan to the company and it a attract a fixed of interest as usual. (B)


5.
Which of these is not include in measuring national income by the income approach
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A.
wages and salaries of public servants
B.
students bursaries and scholarship
C.
profit of international
D.
income of self employed person
E.
rents on property
Explanation. Give a better Explanation
Student bursaries and scholarships are transfer income which is excluded Natona income computation under income approach .(B)


6.
The revenue accruing to the seller of commodity X as a result of a fall in price will
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A.
increase
B.
fall
C.
first fall but increase later
D.
remain unchanged
E.
change noticeably
Explanation. Give a better Explanation
If the price of a particular commodity is reduced quantity demanded will increase gradually and the total revenue will first fall and increase later. Ans C


7.
Deflation is persistence fall in price in the general level and is usually caused by
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A.
a reduction in total demand
B.
an increase in government spending
C.
an increase in money supply to banks
D.
an increase in aggregate demand
E.
an increase in money supply relative to demand
Explanation. Give a better Explanation
Generally, fall in total demand will cause the price to fall, and t will fall persistently if not carefully checked . (A)


8.
Under partnership, investors who have no desire to be actively involved on the daytoday management of such organizations are called
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A.
stock brokers
B.
sleeping partners
C.
part-time investors
D.
ordinary partners
E.
debenture holders
Explanation. Give a better Explanation
Sleeping partners are partners that contributes to the smooth running of the business but does not participate in the day-to-day activities of business. (B)


9.
In a sole proprietorship, decisions are made by the
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A.
government
B.
board of directors
C.
management
D.
shareholders
E.
owners
Explanation. Give a better Explanation
A sole proprietorship business is owned, managed, and financed by an individual owner, thus decisions are made by the owners.(E)


10.
A greater burden of taxes on essential goods is borne by the
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A.
middle income group
B.
higher income group
C.
lower earning group
D.
people falling between the middle and higher income group
E.
top few richest people in an economy
Explanation. Give a better Explanation
The lower earning group usually from the group of final consumers and all burden of tax are shifted on them. (C)


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