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coDE 01240010
FORM TP 2017104 MAY/JUNE 2OI7

CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN SECOI\IDARY EDUCATION CERTIFICATE@

PRINCIPLES OF BUSINESS
Paper 01- General Proficiency
7 hour 15 minates

19 MAY2017 (p.m.)

READ TIIE FOLLOWING INSTRUCTIONS CAREFT]LLY.

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

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

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

4. On your lmswer sheet, find 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 ltem I ,

I
The money that a business receives from the sale
of goods or services is called its Sample Answer
(A) assets
@@o@
(B) capital
(C) income
(D) resources

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

5. lf you want to change your answer, erase it completely before you fiIl in your new choice.

6: 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 No;f TURN THIS PAGE T]NTIL YOU ARE TOLD TO DO SO.

Copyright @ 2015 Caribbean Examinations Council

All rights reserved.

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I Which of the following types of business 4. The term 'division of labour' can be defined
environment is MOST tYPical of the as the
Commonwealth Caribbean?
(A) organization oftasks in production
(A) Corporate state (B) assemblingofgoodsfordistribution
(B) Mixed economy (C) separation of tasks to complete a
(C) CentrallY Planned
job
(D) employment of different types of
(D) PerfectlY comPetitive
- workers

2. Labour is BEST defined as the

5. Private enterprise is run MAINLY to
(A) physical and mental caPabilities
used to perform tasks (A) create profits
(B) ability to carry out management (B) reduce inflation
functions effectivelY (c) distribute goods and services
(D) provide jobs for more PeoPle
(c) level of skills training received by
individuals who are working
(D) total number of Persons who hold
jobs in govemment ministries

3 AMAIOR function of the public sector

is to

(A) make a profit

(B) serve the entire PoPulation
(c) serve the interest qfthe sharelrolder
(D) inspire competition among
businesses I

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Items 6-7 refer to the followiitg diagram relating to the structure of an organization.

CEO

SaIeS Froduction Finance

Manager Manager Manager

HR Purchasing
Supervimr Supervimr

6. The purchasing supervisor reports directly 7 Which of the following positions would be
to the
BEST suited at'X'?
(A) CEO (A) ChiefAdvisor
(B) HR supervisor (B) Board of Directors
(c) finance manager (C) Managing Director
(D) production manager (D) Human Resource Manager

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Item 8 refers to the following information. 11 Under which of the following categories
would subsidizedmeals foremployees fall?'
Mr Lloyd, manager of LM Ltd, holds
regular staff meetings to listen to ideas (A) Fringe benefits
from employees before making decisions (B) Duty allowance
thatwould affect the future ofthe company' (C) Wages and salaries
(D) Workmen's comPensation

8. What leadership style does Mr Lloyd

employ? ' t2 Wiich ofthe following is NOT an example
of collateral?
(A) Autocratic
(B) Charismatic (A) Bond
(c) Democratic (B) Stock
(D) Laissez faire (c) Properly
(D) Money order

9 Management information system (MIS) is

defined as the 13. Which of the following individuals benefit
from having 'limited liability status'?
(A) use of computer technologY to
gather information for use in (A) Franchisees
making decisions within an (B) Shareholders
organization (c) Ordinary partners
(B) technologicalbenefitsgainedbyan (D) Debenture holders
organization for being Part ofa
well organized industry
(C) use ,of various factors within a t4 The condensed version ofthE business plan
i

business to reduce costs and is contained in the j

increase Profits I

(D) managementproc-qssresponsible (A) feasibility plan

for identifYing; anticiPating (B) marketing plan
and satisfYing consu'mer (c) keynote srunmary
requirements at a Profit (D) executive summaryl

10. Which of the following organizations 15. JB Auto Company decided to export car
is LEAST likely to use a managenient engines from Barbados to Trinidad. Which
information system? of the following methods is BEST for
transporting the engines?
(A) The national bank
(B) A shoeshine shoP (A) Air
(C) A department store (B) Sea
(D) A beauty suPPlies outlet (c) Rail
(D) Road

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16. Cash irsed to secure a loan at the bani< is 2l- The term 'human resources'refers to
referred to as
(A) materialc and goods made by human
(A) collateral beings
(B) fixed assets (B) capital invested by shareholders in
(c) current assets a company
(D) fixed deposits (c) raw materials used in ' the
manufacture of goods
(D) persons available for productive
17. A'purchase order'is a and professional services

(A) request for additional goods

(B) notification of goods received 22: Which of the following types of capital
(C) statement of outstanding debts is used for the day-to-day operations of a
(D) ; document offe-ring to buy goods business?

(A) ' Fixed

18. A contract may be discharged by (B) Floating
(C) i Working
("; breach (D) Nominal
(B) change of mind
(c) inconsideration
(D) misappropriation 23 To which of the following industries does
a firm involved in food processing belong?

'19 Kiki sustained bu:rs while at work at a (A) Service

local ,fast food restaurant. Under which (B) Extractive
of the following insurance policies is she (c) Constructive
MOST likely to be compensated? (D) Manufacturing

(A) Public liability

(B) Fidelity guarantee 24. What impact would the introduction of
(C) Property guarantee mechanization in the production process
(D) Employers'liability have on a society?

(A) Reduction in jobs for unskilled

20. The monthly payments made to an workers
insurance company by its policy holders (B) Increased brain dtain in the
are known as economy
(c) Reduction in the pollution of the
(A) deposits countr5r's cities
(B) premiums (D) Provision of morejobs for unskilled
(c) instalments workers
(D) endowments

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25. Which of the following conditions would 29 The term 'loss leader'is BEST described as
constitute a linkage between two industries? a product which

(A) TWo firms manufacture similar (A) has no real market value
goods. (B) the retailer is unable to locate
(B) One firm shares the use of (C) the retailer gives away to customers
machinery with another firm. (D) is sold cheaplyto attract customers
(c) Two firms are responsible for the
manufacture of different kinds
ofioods. . 30. Market equilibrium exists when
(D) The output of one industry of the
economy becomes the input of (A) buyers pay reasonable prices for
another industry. goods
(B) sellers are satisfied with the prices
paid for their goods
26 Which of the following businesses may (c) at current prices, the amount buyers
BEST be classified as a cottage industy? wish to buy equals the amount
sellers want to sell
(A) JMN Superstore, located in the rural (D) at the ruling market price, buyers
area do not want to add to the stock
(B) People's Cooperative Bank, located ofgoods they already have
in Trinidad
(c) Mary's Craft Supplies, located at
home 31. A situation whereby a business gains
(D) Peter and John's Company, located editorial space without having to pay for
in Jamaica it is called

(A) publicity
27 In the Caribbean, many people are hired (B) marketing
for sugar cane farming and very little (c) advertising
equipmentis used. This indultry canBEST (D) discounting
be described as t

(A) labour intensive 32. In a Caribbean territory, there is only one

(B) capital intensive supplier that provides electricity to all
(c) having low capital input homes, businesses and communities. What
(D) having high capital input market structure does this BEST illustrate?

(A) Duopoly
28. Which of the following terms describes (B) Oligopoly
a market consisting of a large number of (C) Monopoly
producers and consumers? (D) Perfect competition

(A) Oligopoly
(B) Monopoly
(C) Perfect market
(D) Imperfect market

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33 Which of the following gives identity to a 3& Which of the following services is provided
specific producer's goods? by commercial banks?

(A) Label (A) Printingloney

(B) Patent (B) Selling stocks and bonds
(C) Brand (C) Controlling the supply of money
(D) Copyright (D) Accepting deposits from customers

34. Which of the following operations is an 39. One of the MAIOR functions of a Cenhal
example of sziles:promotion?

(A) : Warehousing (A) issue notes and coins

(B) Free sa:rrpling (B) , issue stocks and shares
(C) , Servicing goods (c) accept deposit accounts
(D) Gathering infoimation (D) ; make loans and adyances

35. Mr Jones has several bills offixed amounts 40. A stock market is identified with
to pay each month. Mr Jones made an
arrangement with his bank to make these (A) , costs and prices
monthly payments from his account. This (B) risks and benefits
service, provided by the banlq is referred (C) i rent and investment
to as (D) ;premium and reward

(A) an overdraft
(B) a fixed deposit 4t Govemments can influence business activity
(C) a standing order positively by reducing
(D) a letter of credit
(A) taxes
(B) grants
36. Tom invests his savings by buying shares (c) subsidies
in a company. From this investrnent, Tom (D) expenditure
expects to receive

(A) profits 42. A'price control'may be defined as a

(B) interest
(c) revenue (A) tax on goods and serwices
(D) dividends (B) government ban on imports
(C) grant given to producers to reduce
their prices
37. Investnent can be defined as (D) government limit on the price of
goods or serices
(A) the stock of goods in a country
(B) the amount of money available at
a given time
(c) additions to the capital stock of a
country
(D) the amount of capital owned by the
govemment

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43. The success of a govemment's economic 47 Which of the following measures are used
policies can be MOSTeffectively measured by govenrments to redistribute income?'
by
(A) Custom duties and levies
(A) an increase in the level of policies (B) Consumption tax and tariffs
(B) an increase in the standard of (C) PAYE and National Insurance
Iiving (D) Excise duties and value added tax
(c) a decrease in the level of
employment
(D) a decrease in the volume of 48. Acountyhas a favourable balance oftrade
production when

(A) it sells more than it buys

44. Which ofthe following forms oftaxation can (B) it buys more than it sells
be classified as 'direct'? (c) imported goods are cheaper
(D) there are no restrictions to trade
(A) Income tax
(B) Excise duty
(c) Purchase tax 49 Which ofthe following practices would NOT
(D) Customs duty contribute to the economic development
and growth of a county?

45. Which of the following is a function of a (A) Provision of loans and technical
Chamber of Commerce?
assistance for establishing local
businesses
(A) Creating employment (B) Provision of more infrastructure
(B) Protecting the entironment within the country
(c) Assisting in securing markets for (C) Increased use of the country,s
producers j
natural resources
(D) Providing financidl aid to hurricane (D) lncreasedimportationofconsumer
victims i goods
i

ii
46. Which of the following s[atements BEST 50 Education contributes to a country,s
explains a 'proportional tai,? economic growth by ensuring that the
workforce is highly
(A) The rate of tax increases as income
increases. i (A) mobile
(B) The same rate of tax is paid at all (sl efficient
inc6me levels. (c) classified
(c) High income eamers pay a smaller (D) structured
percentage of income in tax than
low income eamers.
(D) High income eamers pay a larger
percentage of income in tax than
low income earners.

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i
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I
I

51. Whilh of the following types of

I
55 The term 'economic dualism' defines an
restrictions limits the quantity of goods economy in which one sector is
that ditizens of a country are allowed to .O

buy fiom overseas? (A) highly dependent on local capital

i (B) highlydependentonforeigncapital
(A) i Import duty (C) overpopulated while the other is
(B) i Export duty underpopulated
(c) Export quota (D) technologicallyadvancedwhilethe
(D) Import quota other is technologically retarded

52 licences are issued MAINLY to 56. The purpose of CARICOM is to

(A) encourage local businesses to (A) allow member states to collaborate

produce more goods for export
(B) indicate to the importing countrY
the price at which the goods are
to be sold
(c) indicate to the importing country
that the goods are of a high
standard
(D) enable the government to control
the flow of goods being exported
(B) , encourage the transfer of tech-
. I nology within the region
(C) foster interregional trade and
common services
(D) allow forthe unrestricted movement
of persons among the territories
s7 Which of the following terms defines a
continirous rise in the general level ofprices?

53. The buying and selling of goods and (A) Inflation

senrices among counffies is called (B) Reflation
(c) Deflation
(A) balance oftrade (D) Depression
(B) international trade
(c) balance of payment
(D) international marketing 58. In periods of inflation, the ability to raise
additional capital for expansion is MOST
i likely to be a problem for
54. Which of the following is NOT a benefit
of international trade? (A) partnerships
(B) sole traders
(A) Producers are able to increase their (C) public companies
market size. (D) multinational corporations
(B) Political links are developed with
other countries.
(c) Lnportrestrictions can be imposed
on foreign items.
(D) A greater variety of goods is
obtained from overseas.

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59 Which of the following is NOT a benefit 60. Which ofthe followingorganizations would
of industrialization? settle a dispute among banana-producing
countries of the Caribbean and Cenfral
(A) Areduction in the level of imports America over preferential agreement with
(B) An increase in the level of exports the European Union?
(c) An increase in the unemployment
rate (A) WorldTradeOrganiz,ation(WfO)
(D) A decrease in the unemployment (B) Caribbean Development Bank
rate (cDB)
(C) CARICOM Single Market and
' Economy (CSME)
(D) Organization of Petroleum
Exporting Countries (OPEC)

END OF TEST

rF YOU FINISII BEFORE TrME rS CALLED, CHECKYOI R WORI( ON THIS TEST

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