Q1. A common stock is ...

[1] a claim on the earnings and assets of a company.

[2] an expense.

[3] a share of bonds in a corporation.

[4] a form of debt.

Q2. A business cycle ...

[1] has no effect on economic performance.

[2] involves borrowing from investors and lending to savers.

[3] is the upward movement of the aggregate output in an economy.

[4] is the upward and downward movement of the aggregate output in an economy.

Q3. Which of the following statements correctly describes the average price of goods and services in an economy?

[1] It is the aggregate price level.

[2] It is the rate of change in the inflation rate.

[3] It is the rate of change in the expenses of government.

[4] It is the price determined by the South African Reserve Bank.

Q4. Which of the following is the basic function of financial markets?

[1] selling of debts and equities

[2] transferring funds from savers to borrowers

[3] offering direct finance

[4] channelling funds from borrowers to savers 22

Q5 Which of the following is not a category of financial markets?

[1] an insurance market

[2] debt and equity market

[3] money market

[4] capital market

Q6. Of the following, the smallest is ...

[1] near money.

[2] other demand deposits.

[3] coins and bank notes.

[4] M2.