CÂU HỎI ORAL TEST CN1

Contents
UNIT 1 .................................................................................................................................................. 12
1. What is the definition of “economics”?................................................................................. 12
2. Who is an economist? ........................................................................................................... 12
3. What is the definition of well-being? .................................................................................... 12
4. What is productivity? ............................................................................................................ 12
5. What are resources of a country? ......................................................................................... 12
6. What are resources of an organization? ............................................................................... 12
7. What are 3 types of resources? ............................................................................................. 12
8. How are all types of resources? ............................................................................................ 12
9. Give some examples for natural resources. .......................................................................... 12
10. Give some examples for human resources. ........................................................................... 12
11. Why is it necessary to study economics? .............................................................................. 12
12. What are 3 main (major) issues studied in economics? ........................................................ 12
13. What are two branches/ types of economics? ...................................................................... 12
14. What is the economic theory of Adam Smith? ...................................................................... 12
15. What is the economic theory of Adam Smith about? ........................................................... 12
16. Why did Adam Smith believe that the government (the visible hand) should not restrict or
interfere in the market? .................................................................................................................. 12
17. What is the economic theory of Karl Marx? .......................................................................... 12
18. What is the economic theory of Karl Marx about? ............................................................... 12
19. Why did Marx suggest that laborers should own and control means of production?.......... 12
20. What is the economic theory of Keynes? .............................................................................. 12
21. What is the economic theory of Keynes about? .................................................................... 13
22. According to Keynes, what can the government do when the economy isn’t growing fast
enough? ........................................................................................................................................... 13
23. According to Keynes, what can the government do when the economy becomes overly
active? ............................................................................................................................................. 13
24. How can studying economics help people?........................................................................... 13
UNIT 2 .................................................................................................................................................. 13
25. What is a quota? ................................................................................................................... 13
26. What are 3 types of economic systems/ models? ................................................................. 13

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 27. What is market economy? What is the definition of market economy? .............................. 13
28. What is the role of companies in market economy? ............................................................. 13
29. What is the role of the government in market economy? .................................................... 13
30. What is planned economy? What is the definition of planned economy?............................ 13
31. What is the role of companies in planned economy? ........................................................... 13
32. What is the role of the government in planned economy? ................................................... 13
33. What is mixed economy? / What is the definition of mixed economy? ................................ 13
34. What is one of differences between market economy and planned economy? ................... 13
35. What is the economic model of Vietnam? ............................................................................ 14
36. What are its main features?.................................................................................................. 14
37. What are different economic sectors in Vietnam’s economy? ............................................. 14
UNIT 3 .................................................................................................................................................. 14
38. What are 3 important themes of microeconomics? ............................................................. 14
39. Why do people (consumers, workers and firms) have to make trade-offs? ......................... 14
40. What is the first theme studied in microeconomics? ............................................................ 14
41. What are limited resources of consumers? ........................................................................... 14
42. Give an example for trade-offs made by consumers?........................................................... 14
43. What does the consumer theory describe? ........................................................................... 14
44. What are limited resources of workers? ............................................................................... 14
45. Give an example for trade-offs made by workers? ............................................................... 14
46. What are resources of firms? ................................................................................................ 14
47. Give an example for trade-off made by firms? ..................................................................... 14
48. What does the theory of the firm describe?.......................................................................... 15
49. Who makes decisions on the allocation of resources in the planned economy? .................. 15
50. Why is it true to say producers have little flexibility of choices in the planned economy? ... 15
51. What are trade-offs? ............................................................................................................. 15
52. What do consumers make trade-offs normally based on? ................................................... 15
53. What is the major role of prices? .......................................................................................... 15
54. How are prices set in the planned economy? ........................................................................ 15
55. How are prices set in the market economy? ......................................................................... 15
UNIT 4 .................................................................................................................................................. 15
56. What are two major macroeconomic policies? .................................................................... 15
57. Who supervises monetary policy? ......................................................................................... 15

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 58. What does monetary policy control? .................................................................................... 15
59. Who supervises fiscal policy? ................................................................................................ 15
60. What does fiscal policy control? ............................................................................................ 15
61. What are the main objectives of macroeconomic policies? .................................................. 15
62. What is the definition of macroeconomics? .......................................................................... 15
63. What do economic trends include? ....................................................................................... 15
64. What does GDP stand for? .................................................................................................... 16
65. Why are microeconomics and macroeconomics actually interdependent and complement
one another? ................................................................................................................................... 16
66. What is the definition of “economic trends”? ....................................................................... 16
67. What is a country's balance of payments? ........................................................................... 16
68. When is the balance of payments of a country in surplus? .................................................. 16
69. When is the balance of payments of a country in deficit? .................................................... 16
70. What is the money supply? ................................................................................................... 16
UNIT 5 .................................................................................................................................................. 16
71. What is demand? .................................................................................................................. 16
72. What are shift factors of demand? ....................................................................................... 16
73. What is quantity demanded? ................................................................................................ 16
74. What is supply? ..................................................................................................................... 16
75. What are shift factors of supply? .......................................................................................... 16
76. What is quantity supplied? .................................................................................................... 16
77. When is a market in equilibrium? ......................................................................................... 16
78. How do prices of a good influence its quantity demanded? ................................................. 16
79. How do prices of a good influence its quantity supplied? ..................................................... 16
80. What is the definition of shift factors? .................................................................................. 16
81. What is market price? ........................................................................................................... 17
82. What does the term “expectation” mean? ........................................................................... 17
83. What is demand curve? ......................................................................................................... 17
84. What is supply curve?............................................................................................................ 17
85. What is market mechanism?................................................................................................. 17
86. What factors cause the whole demand curve shift to the right or the left? ......................... 17
87. If there is an increase in production costs of a good, what will happen to its supply curve?
17

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 88. What does the law of demand describe? .............................................................................. 17
89. What does the law of supply describe? ................................................................................. 17
90. How does a successful advertising campaign of a company influence demand of their
goods? ............................................................................................................................................. 17
91. If the national income increases, what will happen to demand of a good? ......................... 17
92. If the national income decreases, what will happen to demand of a good? ........................ 17
93. What will happen to demand of a particular good if prices of its substitute goods decrease?
17
94. When the government imposes higher tax rates on imported cars, what will happen to the
supply of these imported cars? ....................................................................................................... 17
95. How does high technology influence supply of a good or service? ....................................... 17
UNIT 6 .................................................................................................................................................. 18
1. Where do the government revenues come from? ................................................................ 18
2. What are 2 types of funds generated from taxation? .......................................................... 18
3. What are trust funds? ........................................................................................................... 18
4. What are trust funds used for? ............................................................................................. 18
5. What are federal funds?........................................................................................................ 18
6. What are federal funds used for?.......................................................................................... 18
7. How can the government borrow money?............................................................................ 18
8. What are 2 ways for the treasury to sell government securities? ........................................ 18
9. Who does the government borrow money from? ................................................................. 18
10. What is the money that the government borrows from itself called? .................................. 18
11. What is the money that the government borrows from the public called? .......................... 18
12. What is debt held by federal accounts? ................................................................................ 18
13. What is debt held by the public? ........................................................................................... 18
14. Who are the government’s creditors in the general public? ................................................. 18
15. Who do domestic investors include? ..................................................................................... 18
16. What is individual income tax? ............................................................................................. 18
17. What is corporate income tax? ............................................................................................. 19
18. What is customs duty? .......................................................................................................... 19
19. What is excise tax? ................................................................................................................ 19
20. What are payroll taxes? ........................................................................................................ 19
UNIT 7: FISCAL POLICY ......................................................................................................................... 19

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 21. What is fiscal policy? ............................................................................................................. 19
22. What is the main objective of fiscal policy? .......................................................................... 19
23. What is expansionary fiscal policy?....................................................................................... 19
24. What is contractionary fiscal policy? .................................................................................... 19
25. What is deficit? ...................................................................................................................... 19
26. What is deficit spending? ...................................................................................................... 19
27. What is budget deficit? ......................................................................................................... 19
28. What is revenue? ................................................................................................................... 19
29. What is inflation? .................................................................................................................. 19
30. What is inflation rate?........................................................................................................... 19
31. What is grant? ....................................................................................................................... 19
32. What is solvency? .................................................................................................................. 19
33. What is government revenue? .............................................................................................. 19
34. How do government spending and taxation affect the economy? ....................................... 19
35. When is deficit spending helpful for the economy? .............................................................. 20
36. When is deficit spending harmful for the economy? ............................................................ 20
37. Under what circumstances can fiscal policy be expansionary? ............................................ 20
38. Under what circumstances can fiscal policy be contractionary? .......................................... 20
39. What factors should be considered in making decisions on the fiscal policy? ...................... 20
40. How can deficits be financed? ............................................................................................... 20
41. What may happen when deficits are financed by borrowing? ............................................. 20
42. What may happen when deficits are financed by printing money? ..................................... 20
43. How can the government generate its revenue? .................................................................. 20
44. What are the purposes of expansionary fiscal policy? .......................................................... 20
45. What are the purposes of contractionary fiscal policy? ........................................................ 20
46. What are the main tools of fiscal policy? .............................................................................. 20
47. Why should the government consider fiscal policies of other countries? ............................. 20
UNIT 8: TAXATION ................................................................................................................................ 21
48. What is the primary function of taxation? ............................................................................ 21
49. What is the function of indirect excise duties? ..................................................................... 21
50. What is the function of income taxes? .................................................................................. 21
51. Why is it said that business profits are generally taxed twice? ............................................ 21
52. What is the marginal rate? ................................................................................................... 21

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 53. What does national insurance mean? .................................................................................. 21
54. How do individuals evade tax? .............................................................................................. 21
55. How can highly-paid employees reduce their income tax liability? ...................................... 21
56. What is consumption? ........................................................................................................... 21
57. What is one of the ways for companies to avoid tax on profits? .......................................... 21
58. Where should multinational companies set up their subsidiaries? ...................................... 21
59. How do criminal organizations launder money/ disguise the origin of money from tax
inspectors and the police? ............................................................................................................... 21
60. What is a progressive tax? .................................................................................................... 21
61. What is a regressive tax? ...................................................................................................... 21
62. What does the term “tax shelter” mean? ............................................................................. 21
63. What does the term “tax deductible” mean? ....................................................................... 21
64. What does the term “tax haven” mean? .............................................................................. 21
65. What does the term “individual income tax” mean? ............................................................ 21
66. What is a direct tax? ............................................................................................................. 21
67. What is an indirect tax? ........................................................................................................ 22
68. What is a value-added tax?................................................................................................... 22
69. What is a capital gain tax? .................................................................................................... 22
70. What is a capital transfer tax? .............................................................................................. 22
71. What is a wealth tax?............................................................................................................ 22
72. What does the term “tax evasion” mean? ............................................................................ 22
73. What does tax avoidance mean? .......................................................................................... 22
74. What does the term “perks” mean?...................................................................................... 22
75. What does depreciation mean? ............................................................................................ 22
76. What is a sales tax? ............................................................................................................... 22
77. What are loopholes in tax laws? ........................................................................................... 22
78. What is the function of corporate income tax? .................................................................... 22
UNIT 10 – INSURANCE.......................................................................................................................... 22
79. In what way can losses be predicted before they occur? 
 ................................................. 22
80. What is insurance in financial definition? 
 ........................................................................ 22
81. How can an insurance system accomplish the redistribution of the costs of losses? ........... 22
82. What does the insured receive when a loss occurs? 
 ........................................................ 22
83. What does the insured receive when he/ she takes out an insurance policy? ...................... 22

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 84. Why are people willing to pay an insurance premium? 
 ................................................... 22
85. What does the insured receive if no loss occurs? 
 ............................................................. 22
86. What does the term “premium” mean in insurance? ........................................................... 23
87. What does the term “compensation” mean in insurance? ................................................... 23
88. What are 2 parties of an insurance policy? ........................................................................... 23
89. What is an insurance policy? ................................................................................................. 23
90. Who is an insurer? ................................................................................................................. 23
91. Who is the insured? ............................................................................................................... 23
92. What are 2 main types of insurance basically?..................................................................... 23
93. What Is Life Insurance? ......................................................................................................... 23
94. What Is Non-Life Insurance? ................................................................................................. 23
95. Who are beneficiaries in a life insurance policy? .................................................................. 23
96. Give examples for non-life insurance .................................................................................... 23
97. What are benefits of insurance for the insured?................................................................... 23
98. What are benefits of insurance for the insurer? ................................................................... 23
99. What are benefits of insurance for the economy? ................................................................ 23
100. What does the insured pay to the insurer? ....................................................................... 23
101. What can the insured get from the insurer in the event of a loss? ................................... 23
UNIT 11 ................................................................................................................................................ 24
1. What is a foreign currency? .................................................................................................. 24
2. What is “money”? ................................................................................................................. 24
3. What is the definition of “legal tender”? .............................................................................. 24
4. What is the definition of “denomination”? ........................................................................... 24
5. What is a medium of exchange? ........................................................................................... 24
6. What is token money? ........................................................................................................... 24
7. What are 4 functions of money? ........................................................................................... 24
8. How is money used as a medium of exchange? .................................................................... 24
9. What does the settlement of a debt mean? ......................................................................... 24
10. What is barter economy? ...................................................................................................... 24
11. What is a measure of value? ................................................................................................. 24
12. Why is it more convenient to use money as a means of payment as well as a unit of
account? .......................................................................................................................................... 24
13. What is a store of value? ....................................................................................................... 24

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 14. Why isn’t money the best store of value? ............................................................................. 24
15. What are better stores of value? .......................................................................................... 24
16. What is a standard of deferred payment? Or unit of account over time? ............................ 24
17. What makes the function of money as a standard of deferred payment more important? 24
18. If you buy a good on credit, how do you make payments for that good? ............................ 24
19. What is one of the reasons to explain why medium of exchange is the most important
function of money?.......................................................................................................................... 25
20. What are 2 main types of money, basically? ........................................................................ 25
21. What are examples for commodity money? ......................................................................... 25
22. What are examples for token money? .................................................................................. 25
23. What is the monetary value or purchasing power of commodity money in comparison with
its material value? ........................................................................................................................... 25
24. What is the monetary value or purchasing power of token money in comparison with its
material value? ................................................................................................................................ 25
25. What is one of the advantages of token money in comparison with commodity money? .. 25
UNIT 12: MONETARY POLICY ............................................................................................................... 25
26. What is the monetary policy? ............................................................................................... 25
27. What are the objectives (or goals) of monetary policy? 
 .................................................. 25
28. What are main tools of monetary policy? 
 ........................................................................ 25
29. What is reserve requirement? 
 .......................................................................................... 25
30. What is the role of reserve requirements? 
 ....................................................................... 25
31. How can the Central bank make changes to the money supply by changing reserve
requirements? ................................................................................................................................. 25
32. What happens if the Central bank increases the reserve requirement? ............................... 25
33. What happens if the Central bank reduces the reserve requirement? ................................. 26
34. What is the discount rate? 
 ............................................................................................... 26
35. What happens if the central bank increases the discount rate? ........................................... 26
36. What happens if the central bank reduces the discount rate? ............................................. 26
37. What will happen if the Central banks buy government securities? .................................... 26
38. What will happen if the Central banks sell government securities? ..................................... 26
39. What are open market operations? ...................................................................................... 26
40. What is a deposit? ................................................................................................................. 26
41. How can banks encourage people to borrow and spend more money? ............................... 26

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 42. How can banks restrict people to borrow and spend less money? ....................................... 26
43. Under what circumstance should monetary policy be expansionary?.................................. 26
44. Under what circumstance should monetary policy be restrictive? ....................................... 26
45. What is expansionary monetary policy? ............................................................................... 26
46. What is restrictive monetary policy? ..................................................................................... 26
47. Who are depositors of a bank? ............................................................................................. 26
48. What are objectives of expansionary monetary policy? ....................................................... 26
49. What is the objective of restrictive monetary policy? ........................................................... 26
50. What can banks do if they are short of reserves? ................................................................. 26
UNIT 14 ................................................................................................................................................ 27
51. What is foreign exchange market (Forex)? ........................................................................... 27
52. Based on the operation of the markets, how are financial markets classified? ................... 27
53. What does OTC stand for? .................................................................................................... 27
54. What is an OTC (over-the-counter) market? What are features of an OTC market? ........... 27
55. What is an organized market? .............................................................................................. 27
56. What is exchange rate? ......................................................................................................... 27
57. What are different types of transactions in a foreign exchange market? ............................ 27
58. What are spot transactions? ................................................................................................. 27
59. What are forward transactions? ........................................................................................... 27
60. What is the significance/ purpose of forward transactions? ................................................ 27
61. What is one of reasons for the developments of the Forex? ................................................ 27
62. What is one of the reasons why London is the largest foreign exchange center in the world?
27
63. What is international financial business generated in London? ........................................... 27
64. What helps London to trade with many cities in the whole world easily?............................ 28
65. What are different types of participants in the foreign exchange market? ......................... 28
66. Who is a participant? ............................................................................................................ 28
67. Who is the market maker? .................................................................................................... 28
68. What is the role of the market maker in Forex? ................................................................... 28
69. Why do market makers have to quote the frame of exchange rates at any time? .............. 28
70. Who are dealers in Forex? ..................................................................................................... 28
71. How do dealers participate in Forex?.................................................................................... 28
72. What purposes do dealers participate in Forex for? ............................................................. 28

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 73. Who are customers in Forex? ................................................................................................ 28
74. For what purposes do multinational corporations participate in Forex? ............................. 28
75. For what purposes do importers and exporters participate in Forex? .................................. 28
76. For what purposes do individuals participate in Forex?........................................................ 28
77. Who are brokers in Forex? .................................................................................................... 28
78. How do brokers participate in Forex? ................................................................................... 28
79. What purposes do brokers participate in Forex for?............................................................. 28
80. What are bid rates (buying rates)? ....................................................................................... 29
81. What does the term “transaction” mean? ............................................................................ 29
82. What does the term “volatility” mean? ................................................................................ 29
UNIT 15 ................................................................................................................................................ 29
83. Based on types of financial instruments, how are securities markets classified? ................ 29
84. What are equity markets? ..................................................................................................... 29
85. What are equity instruments?............................................................................................... 29
86. What are debt markets? ....................................................................................................... 29
87. What are debt instruments? ................................................................................................. 29
88. What are short-term debt instruments? ............................................................................... 29
89. What are long-term debt instruments? ................................................................................ 29
- What are intermediate-term debt instruments? ...................................................................... 29
90. What are benefits for the creditors of a company? .............................................................. 29
91. Can creditors intervene/ interfere in the company’s operations? Why? .............................. 29
92. Why are equity instruments long-term securities? ............................................................... 29
93. What are benefits for the shareholders of a company? ....................................................... 29
94. How can shareholders get back their money? ...................................................................... 29
95. Can shareholders intervene/ interfere in the company’s operations? Why? ........................ 29
96. Based on functions of the markets, how are securities markets classified? ......................... 30
97. What are primary markets? .................................................................................................. 30
98. Who can be initial buyers? .................................................................................................... 30
99. Can private investors access to information of the primary markets? Why? ....................... 30
100. How are primary markets important to issuers?............................................................... 30
101. What are secondary markets?........................................................................................... 30
102. How are secondary markets important to issuers? ........................................................... 30
103. What types of markets are more popular for private investors? Why? ............................ 30

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104. Based on operations of the markets, how are secondary markets classified? ................. 30
105. Based on the maturity of financial instruments, how are securities markets classified? . 30
106. What are money markets? ................................................................................................ 30
107. What are capital markets? ................................................................................................ 30
108. What does the term “maturity” mean?............................................................................. 30
109. What does the term “mortgage” mean? ........................................................................... 30

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UNIT 1
1. What is the definition of “economics”?
Economics is the study (n) of / Economics studies (v) how people choose to use resources the most
effectively to produce goods and services in order to best satisfy human demand.
2. Who is an economist?
An economist is a person who studies economics.
3. What is the definition of well-being?
Well-being means the satisfaction that people gain from / gained from the consumption of goods &
services, the time shared with your relatives, friends, ..
4. What is productivity?
Productivity is the rate at which goods are produced.
5. What are resources of a country?
A country's resources are the things that it has and can use to increase its wealth, such as coal, oil, or
land.
6. What are resources of an organization?
The resources of an organization are the materials, money, and other things that they have and can
use in order to function properly.
7. What are 3 types of resources?
Resources can be divided into 3 types of natural resources, human resources and capital.
8. How are all types of resources?
All types of resources are limited / scarce.
9. Give some examples for natural resources.
Natural resources include land, water, wind, solar energy, mineral underground, etc.
10. Give some examples for human resources.
Human resources include labor force, time, talent, inventions, patents, knowledge, experience, etc.
11. Why is it necessary to study economics?
Because all types of resources are limited, while/ whereas the human demand is unlimited.
12. What are 3 main (major) issues studied in economics?
They are production, distribution and consumption of goods and services
13. What are two branches/ types of economics?
Economics can be divided into microeconomics and macroeconomics
14. What is the economic theory of Adam Smith?
It is the Classical School.
15. What is the economic theory of Adam Smith about?
It says that because of their own interests, people produce goods and wealth that benefit all society.
16. Why did Adam Smith believe that the government (the visible hand) should not restrict or
interfere in the market?
Because the market could regulate itself and could produce wealth at maximum efficiency.
17. What is the economic theory of Karl Marx?
It is Marxism.
18. What is the economic theory of Karl Marx about?
Marx believed that owners’ exploitation of labor leads to social unrest and class conflict, so laborers
should own and control means of production in order to ensure the social and economic stability.
19. Why did Marx suggest that laborers should own and control means of production?
Because Marx believed that owners’ exploitation of labor leads to social unrest and class conflict.
20. What is the economic theory of Keynes?
It is Keynesian School.

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 21. What is the economic theory of Keynes about?
The theory of Keynes describes how governments use macroeconomic policies to regulate the
economy, ensuring the social and economic stability.
22. According to Keynes, what can the government do when the economy isn’t growing fast
enough?
The government can reduce taxes or increase government spending to promote economic growth and
reduce unemployment.
23. According to Keynes, what can the government do when the economy becomes overly
active?
The government can increase taxes and reduce government spending
24. How can studying economics help people?
Studying economics can help people understand human thought and behavior.

UNIT 2
25. What is a quota?
A quota is the limited number or quantity of something which is officially allowed.
26. What are 3 types of economic systems/ models?
3 types of economic systems/ models are: market economy, planned economy and mixed economy
27. What is market economy? What is the definition of market economy?
Market economy is an economic system in which economic relations are regulated by the law of
supply and demand.
28. What is the role of companies in market economy?
Companies can compete freely/ there is free competition among companies in market economy.
29. What is the role of the government in market economy?
There is no direct government intervention, but the government influences the economy through its
economic policies.
30. What is planned economy? What is the definition of planned economy?
Planned economy is an economic system in which all production, distribution and consumption
quotas are fixed beforehand by the government.
31. What is the role of companies in planned economy?
There is no real competition among companies, and private ownership doesn’t exist.
32. What is the role of the government in planned economy?
The government controls all the means of production and channels of distribution.
33. What is mixed economy? / What is the definition of mixed economy?
- It is an economic system in which some goods and services are produced by the government and
some by private enterprise
34. What is one of differences between market economy and planned economy?
In a market economy, economic relations are regulated by the S & D, but they are determined by the
government in a planned economy.
Hoặc:

13
Companies can compete freely in market economy, but there is no real competition among
companies in planned economy.
35. What is the economic model of Vietnam?
- The market economy under the government’s control/ state control
- The market economy under socialism orientation
36. What are its main features?
The economy of Vietnam is considered a multi-sector economy (kinh tế nhiều thành phần).
37. What are different economic sectors in Vietnam’s economy?
Different sectors such as
+ state companies
+ private companies
+ joint-ventures (liên doanh)
+ foreign companies

UNIT 3
38. What are 3 important themes of microeconomics?
- 3 important themes of microeconomics are: the allocation of scarce resources, the role of prices
and the role of markets.
39. Why do people (consumers, workers and firms) have to make trade-offs?
All of resources are scarce, while human demand is unlimited
40. What is the first theme studied in microeconomics?
It is the allocation of scare resources.
41. What are limited resources of consumers?
The limited resources of consumers are their incomes.

42. Give an example for trade-offs made by consumers?

Consumers may trade off the purchase of more of some goods with the purchase of less of others.
Or: Another example for a trade-off of consumers may be trading off current consumption for future
consumption.
43. What does the consumer theory describe?
The consumer theory describes how consumers can best make trade-offs based on their limited
resources and preferences.

44. What are limited resources of workers?

Resources of workers are their time and talent, knowledge, working experience, etc.
45. Give an example for trade-offs made by workers?
They have to decide when to enter the workforce, which job to do, who to work for.

46. What are resources of firms?

Resources of firms are human resources, financial resources, production capacity, technology,
management ability, reputation (trade mark), brands, and so on.

47. Give an example for trade-off made by firms?

Firms have to decide what to produce, how to produce and for whom to produce.

14
 48. What does the theory of the firm describe?
The theory of the firm describes how companies can best make trade-offs.
49. Who makes decisions on the allocation of resources in the planned economy?
The Government fixes all production, distribution and consumption quotas beforehand.

50. Why is it true to say producers have little flexibility of choices in the planned economy?
Because in the planned economy, firms are told by the government what and how much to produce,
and how to produce it.

51. What are trade-offs?

A trade-off (n): an exchange; esp., a giving up (từ bỏ) of one benefit, advantage, etc. in order to gain
another regarded as more desirable
52. What do consumers make trade-offs normally based on?
Consumers make trade-offs normally based on their incomes and their preferences.

53. What is the major role of prices?

All of the trade-offs made by consumers, workers and firms are based on the prices.

54. How are prices set in the planned economy?

In the planned economy, prices are set by the government.

55. How are prices set in the market economy?

In the market economy, prices are determined by the interactions of consumers, workers and firms.

UNIT 4
56. What are two major macroeconomic policies?
They are monetary policy and fiscal policy
57. Who supervises monetary policy?
The Central Bank of each country supervises monetary policy.
58. What does monetary policy control?
It controls the money supply (lượng cung tiền) of a nation.
59. Who supervises fiscal policy?
The Ministry of Finance supervises fiscal policy.
60. What does fiscal policy control?
It controls the government’s revenue and spending
61. What are the main objectives of macroeconomic policies?
The main objectives of macroeconomic policies are: to promote economic growth, to control
inflation and to reduce unemployment rates.
62. What is the definition of macroeconomics?
- Macroeconomics is the branch of economics that studies overall economic trends within one
economy and interactions among different economies in the world.
63. What do economic trends include?
Economic trends include employment levels, economic growth, balance of payments, inflation and
so on.

15
 64. What does GDP stand for?
GDP stands for Gross Domestic Products.
65. Why are microeconomics and macroeconomics actually interdependent and complement
one another?
They are actually interdependent and complement one another because there are many overlapping
issues between the two fields.
66. What is the definition of “economic trends”?
Economic trends refer to changes or developments in economies.
67. What is a country's balance of payments?
The balance of payments of a country is the difference between the payments it makes to other
countries for imports and the payments it receives from other countries for exports over a period of
time.
68. When is the balance of payments of a country in surplus?
It is in surplus when the country exports more than it imports.
69. When is the balance of payments of a country in deficit?
It is in deficit when the country imports more than it exports.
70. What is the money supply?
The money supply is the total amount of money in a country's economy at any one time.

UNIT 5
71. What is demand?
Demand refers to all possible quantities of goods and services that buyers are able and willing to
buy at all possible prices.
72. What are shift factors of demand?
Shift factors of demand are society’s income, prices of other goods, expectations of consumers and
tastes.
73. What is quantity demanded?
Quantity demanded is the specific amount of goods and services that buyers are willing and able to
buy at a certain price.
74. What is supply?
Supply refers to all possible quantities of goods and services that sellers are able and willing to sell
at all possible prices.
75. What are shift factors of supply?
Shift factors of supply are prices of inputs, technology, taxes and suppliers’ expectations.
76. What is quantity supplied?
Quantity supplied is the specific amount of goods and services that sellers are willing and able to sell
at a certain price.
77. When is a market in equilibrium?
A market is in equilibrium when the quantity demanded is equal to quantity supplied at a certain
price.
78. How do prices of a good influence its quantity demanded?
When other things are constant, if price of goods increases, the quantity demanded will decrease
and vice versa.
79. How do prices of a good influence its quantity supplied?
When other things are constant, if price of goods increases, the quantity supplied will increase and
vice versa.
80. What is the definition of shift factors?
Shift factors are things other than prices that cause shift of a demand curve or supply curve to the
right or to the left.

16
 81. What is market price?
Market price is the price at which buyers and sellers trade the item in an open market place.
82. What does the term “expectation” mean?
“Expectation” means strong hope or belief that something will happen.
83. What is demand curve?
Demand curve is a graphic representation of the relationship between product price and the
quantity of the product demanded.
84. What is supply curve?
Supply curve is a graphic representation of the relationship between product price and the quantity
of the product supplied.
85. What is market mechanism?
Market mechanism is the manner in which consumers and producers can determine the price and
the quantity the things produced.
86. What factors cause the whole demand curve shift to the right or the left?
Shift factors cause the whole demand curve shift to the right or the left.
87. If there is an increase in production costs of a good, what will happen to its supply curve?
The supply curve will shift to the left./ There will be a decrease in its supply.
88. What does the law of demand describe?
When other things are constant, if price of goods increases, the quantity demanded will decrease
and vice versa.
89. What does the law of supply describe?
When other things are constant, if price of goods increases, the quantity supplied will increase and
vice versa.
90. How does a successful advertising campaign of a company influence demand of their goods?
A successful advertising campaign of a company causes an increase in demand of their goods
Or
A successful advertising campaign of a company causes the whole demand curve of their goods shift
to the right.
91. If the national income increases, what will happen to demand of a good?
If national income increases the aggregate demand of a good will increase.
Or
An increase in national incomes will cause the whole demand curve shift to the right.
92. If the national income decreases, what will happen to demand of a good?
If national income decreases the aggregate demand of a good will decrease.
Or
A decrease in national incomes will cause a shift of the whole demand curve to the left.
93. What will happen to demand of a particular good if prices of its substitute goods decrease?
If prices of substitute goods of a particular good demand of that particular good will decrease.
Or: This is illustrated in a graph as a shift of the whole demand curve to the left.
94. When the government imposes higher tax rates on imported cars, what will happen to the
supply of these imported cars?
When the government imposes higher tax rates on imported cars, the supply curve of these imported
cars will shift to the left.
95. How does high technology influence supply of a good or service?
High technology can help companies to produce more goods and services, so the aggregate supply
will increase. Or: This is illustrated in a graph as the shift of the whole supply curve to the right.

17
UNIT 6
1. Where do the government revenues come from?
Or: What are sources of the government revenues?
- The government revenues mostly come from taxation.
2. What are 2 types of funds generated from taxation?
They are trust funds and federal funds.
3. What are trust funds?
Trust funds are the government revenues generated from payroll taxes including social (national)
insurance and health insurance.
4. What are trust funds used for?
Trust funds are used for social security and medicare.
5. What are federal funds?
Federal funds are the government revenues generated from income taxes, customs duty, excise tax
and so on.
6. What are federal funds used for?
Federal funds are used for building infrastructure, paying salaries for state employees, running the
government body.
Or:
Federal funds are used for the government projects and programs.
7. How can the government borrow money?
The government borrows more money by issuing and selling bonds or other types of government
securities.
8. What are 2 ways for the treasury to sell government securities?
The treasury can sell government securities directly through its website or indirectly through banks or
brokers.
9. Who does the government borrow money from?
The government borrows money from itself and from the public.
10. What is the money that the government borrows from itself called?
It is called debts held by federal accounts.
11. What is the money that the government borrows from the public called?
It is called debts held by the public.
12. What is debt held by federal accounts?
Debt held by federal accounts is the amount of money that the Treasury borrows from the surplus of
trust funds.
13. What is debt held by the public?
Debt held by the public is the total amount the government owes to all of its creditors in the general
public.
14. Who are the government’s creditors in the general public?
They are domestic investors and international investors.
15. Who do domestic investors include?
Domestic investors include private domestic investors, the central bank and local governments.
16. What is individual income tax?
Individual income tax is the tax (which is) imposed/ levied on individual incomes.

18
 17. What is corporate income tax?
Corporate income tax is the tax imposed on corporate incomes
18. What is customs duty?
Customs duty is the tax imposed on imports/ imported goods.
19. What is excise tax?
Excise tax is the tax imposed on specific goods such as alcohol, beer, hotels, restaurants, and so on.
20. What are payroll taxes?
Payroll taxes are taxes are based on payroll including social insurance and health insurance paid
jointly by workers and employers.

UNIT 7: FISCAL POLICY

21. What is fiscal policy?
Fiscal policy is a government policy related to taxation and public spending.
22. What is the main objective of fiscal policy?
The main objective of fiscal policy is to maintain economic growth, high employment and low inflation.
23. What is expansionary fiscal policy?
Fiscal policy is expansionary when taxation is reduced or public spending is increased.
24. What is contractionary fiscal policy?
Fiscal policy is contractionary when taxation is increased or public spending is reduced.
25. What is deficit?
Deficit is the total amount by which money spent is more than money received.
26. What is deficit spending?
Deficit spending is a situation in which a company or especially a government spends more money
than it collects for a given period of time.
Or
What is government’s deficit spending?
Government’s deficit spending means spending funds obtained by borrowing or printing instead of
taxation.
27. What is budget deficit?
Budget deficit is the difference between a government’s income and how much it spends.
28. What is revenue?
Revenue is the income that a government or company receives regularly.
29. What is inflation?
Inflation is the rise in prices resulting from an increase in the supply of money.
30. What is inflation rate?
Inflation rate is the rate at which prices increase overtime causing the value of money to fall.
31. What is grant?
Grant is an amount of money given, usually by a government or nonprofit organization to fund certain
projects.
32. What is solvency?
Solvency is the ability to pay all the money that is owed.
33. What is government revenue?
Government revenue is the money received from taxation, fees, fines, securities sales as well as any
sales that are made.
34. How do government spending and taxation affect the economy?
Government spending and taxation affect the economy directly.

19
 35. When is deficit spending helpful for the economy?
Deficit spending is helpful for the economy when unemployment is high or economic growth is low.
36. When is deficit spending harmful for the economy?
Deficit spending is harmful for the economy when unemployment is low or inflation is high.
37. Under what circumstances can fiscal policy be expansionary?
Fiscal policy can be expansionary when the economy is not growing fast enough or unemployment is
too high.
38. Under what circumstances can fiscal policy be contractionary?
Fiscal policy can be contractionary when the economy is growing too fast or inflation is high.
39. What factors should be considered in making decisions on the fiscal policy?
They are the level of economic growth or unemployment likely in the future, political considerations,
fiscal policies of other countries and the requirements of the IMF.
40. How can deficits be financed?
Deficits can be financed by borrowing or printing more money.
41. What may happen when deficits are financed by borrowing?
The interest rates may rise.
42. What may happen when deficits are financed by printing money?
Prices and inflation may rise.
43. How can the government generate its revenue?
The government generates its revenue by collecting taxes and borrowing more money.
44. What are the purposes of expansionary fiscal policy?
It is used for creating jobs and developing the economy.
45. What are the purposes of contractionary fiscal policy?
It is used for slowing down the economy and reducing inflation.
46. What are the main tools of fiscal policy?
They are government spending and taxation.
47. Why should the government consider fiscal policies of other countries?
Because fiscal policies of other countries may tempt multinational corporations to relocate their
subsidiaries by offering them generous tax programs or other government-controlled benefits.

20
UNIT 8: TAXATION
48. What is the primary function of taxation?
The primary function of taxation is to raise revenue to finance government expenditure.
49. What is the function of indirect excise duties?
The function of indirect excise duties is to dissuade people from consuming unnecessary goods and
services.
50. What is the function of income taxes?
Income tax is one of the ways in which government can redistribute wealth.
51. Why is it said that business profits are generally taxed twice?
Business profits are generally taxed twice: companies pay tax on their profit and the shareholders pay
income tax on dividends.
52. What is the marginal rate?
The marginal rate is the tax people pay on any additional income.
53. What does national insurance mean?
National insurance means a tax on payrolls that pays for sickness benefit, unemployment benefit and
old-age pensions
54. How do individuals evade tax?
Self- employed people and people with part-time jobs don’t declare their incomes to the tax offices.
55. How can highly-paid employees reduce their income tax liability?
To reduce income tax liability, highly-paid employees receive lots of perks instead of taxable money
such as company cars, free health insurance and subsidized lunches.
56. What is consumption?
Consumption is defined as the use of goods and services by a household.
57. What is one of the ways for companies to avoid tax on profits?
Companies can bring forward capital expenditure on new factories, machines and so on so that at the
end of the year all the profits have been used up.
58. Where should multinational companies set up their subsidiaries?
Multinational companies should set up their subsidiaries in countries where taxes are low/ tax havens.
59. How do criminal organizations launder money/ disguise the origin of money from tax
inspectors and the police?
Criminal organizations tend to pass money through a series of companies in very complicated
transactions
60. What is a progressive tax?
A progressive tax is the tax imposed at a higher rate on higher incomes
61. What is a regressive tax?
A regressive tax is a tax which is imposed at the same tax rates, so that poorer people need to spend
a larger proportion of their incomes than the rich.
62. What does the term “tax shelter” mean?
Tax shelter means delaying the payment of taxes to a later time.
63. What does the term “tax deductible” mean?
Tax-deductible means the amount of money subtracted from taxable incomes or profits
64. What does the term “tax haven” mean?
Tax haven means a country offering very low tax rates to foreign businesses.
65. What does the term “individual income tax” mean?
Individual income tax is the tax imposed on wages and salaries of individuals.
66. What is a direct tax?
A direct tax is a tax which a person or organization pays directly to the government/ to the tax office,
for example income tax.

21
 67. What is an indirect tax?
An indirect tax is a tax on certain manufactured goods, imports, etc. that is paid indirectly by the
consumer because it is included in the price
68. What is a value-added tax?
A value-added tax is a tax collected at each stage of production, excluding the already-taxed costs
from previous stages.
69. What is a capital gain tax?
A capital gain tax is the tax imposed on profits made by selling assets of a company.
70. What is a capital transfer tax?
A capital transfer tax is the tax imposed on gifts and inheritances over a certain value.
71. What is a wealth tax?
A wealth tax is the annual tax imposed on people’s fortunes/ real assets.
72. What does the term “tax evasion” mean?
Tax evasion means making false declaration to the tax authorities.
73. What does tax avoidance mean?
Tax avoidance means reducing the amount of tax you pay to a legal minimum.
74. What does the term “perks” mean?
Perks mean other benefits rather than taxable money paid / offered by companies for employees.
75. What does depreciation mean?
Depreciation means reducing the value of a fixed asset by charging it against profits.
76. What is a sales tax?
A sales tax is a consumption tax imposed by the government on the sale of goods and services.
77. What are loopholes in tax laws?
Loopholes in tax laws are legal ways of avoiding taxes.
78. What is the function of corporate income tax?
Corporate income taxes also encourage capital investment with different methods of depreciation
accounting.

UNIT 10 – INSURANCE

79. In what way can losses be predicted before they occur? 


Through the operation of insurance system, losses can be predicted in advance
80. What is insurance in financial definition? 

Insurance is a financial arrangement that redistributes the costs of unexpected losses.
81. How can an insurance system accomplish the redistribution of the costs of losses?
An insurance system accomplishes the redistribution of the costs of losses by collecting a premium
payment from every participant in the system.
82. What does the insured receive when a loss occurs? 

The insured receives compensation from the insurer in the event of a loss.
83. What does the insured receive when he/ she takes out an insurance policy?
The insured receives a promise from the insurer to be compensated in the event of a loss.
84. Why are people willing to pay an insurance premium? 

People are willing to pay an insurance premium to reduce the uncertainty about a loss, and can get
compensation if the loss actually occurs.
85. What does the insured receive if no loss occurs? 

If no loss occurs during a year, the insured still has value in forms of the eliminated anxiety about a

22
loss.
86. What does the term “premium” mean in insurance?
Premium is an amount paid periodically to the insurer by the insured for covering his risk.
87. What does the term “compensation” mean in insurance?
Compensation is the amount paid by an insurance company to the insured when in the event of a loss.
88. What are 2 parties of an insurance policy?
- They are the policyholder (the insured) and the insurer.
89. What is an insurance policy?
Insurance policy is an insurance contract signed between the insured (policyholder) and an insurance
company (an insurer).
90. Who is an insurer?
An insurer is a company that sells insurance.
91. Who is the insured?
The insured are people who buy insurance.
92. What are 2 main types of insurance basically?
Basically, there are 2 main types of insurance of life insurance and non-life insurance.
93. What Is Life Insurance?
- it’s a policy you buy that pays money to your family if you pass away.
94. What Is Non-Life Insurance?
- Non-life insurance is any type of insurance other than life insurance.
95. Who are beneficiaries in a life insurance policy?
The beneficiaries are the people or entities that will receive the death benefit.
96. Give examples for non-life insurance
- Some common examples of non-life insurance include: Auto insurance, Property insurance,
Health insurance, Accident insurance, Travel insurance, etc.
97. What are benefits of insurance for the insured?
Or: Taking out insurance policies, what benefits can the insured get?
- The insured can get benefits in the form of compensations paid by insurers in case of a loss,
and reduced anxiety about losses in case of no loss.
98. What are benefits of insurance for the insurer?
- Insurers can raise big amounts of capital by collecting regular premium payments from many
participants.
99. What are benefits of insurance for the economy?
The insurance system partly helps promote economic growth by transferring money from the insured
to borrowers to expand their business, or to increase their production, and so on.
100. What does the insured pay to the insurer?
- The insured pay to insurance premium the insurer.
101. What can the insured get from the insurer in the event of a loss?
- The insured can get compensation from the insurer in the event of a loss.

23
UNIT 11
1. What is a foreign currency?
A foreign currency is the currency used in other countries, and not in your own country.
2. What is “money”?
Money is the coins or bank notes that you use to buy things, or the sum that you have in a bank
account.
3. What is the definition of “legal tender”?
Legal tender is money, especially a particular coin or banknote, which is officially part of a country's
currency at a particular time.
4. What is the definition of “denomination”?
The denomination of a banknote or coin is its official value.
5. What is a medium of exchange?
Medium of exchange is anything that is widely accepted as payments for goods and services and
settlements of debts.
6. What is token money?
Token money is a metal or plastic disc, such as a substitute for currency for use in slot machines
7. What are 4 functions of money?
They are medium of exchange (means of payment); measure of value (unit of account); store of
value and standard of deferred payment
8. How is money used as a medium of exchange?
As a medium of exchange, money is used to make payments for goods and services, as well as make
settlements of debts.
9. What does the settlement of a debt mean?
The settlement of a debt is the act of paying back money that you owe.
10. What is barter economy?
Barter economy is the economy in which goods and services are traded directly without the use of
money.
11. What is a measure of value?
Measure of value or unit of account is the unit in which prices are quoted and accounts are kept.
12. Why is it more convenient to use money as a means of payment as well as a unit of account?
Because there is no need to exchange one currency for another.
13. What is a store of value?
As a store of value, money is used to make purchases in the future or money is saved for future use.
14. Why isn’t money the best store of value?
Because money can reduce its value over time due to inflation.
15. What are better stores of value?
Property (bất động sản) and gold and some other types of investments can function as a store of
value better.
16. What is a standard of deferred payment? Or unit of account over time?
As a standard of deferred payment, money is used to make payments for debts in the future.
17. What makes the function of money as a standard of deferred payment more important?
This function becomes more important because of the expansion of the installment buying.
18. If you buy a good on credit, how do you make payments for that good?
Firstly you have to pay a deposit, then you have to make regular repayments until the debts are
used up.

24
 19. What is one of the reasons to explain why medium of exchange is the most important
function of money?
Because the use of money as a medium of exchange helps promote trade, simplify the trading
process/
Or: the use of money as a medium of exchange helps people to save time and energy to trade goods
and services with one another.
Or: money as a medium of exchange has made the exchange of goods and services much simpler,
much more efficient.
20. What are 2 main types of money, basically?
They are commodity money and token money.
21. What are examples for commodity money?
Examples for commodity money are gold coins and silver coins.
22. What are examples for token money?
Examples for token money are banknotes and metal coins; checks or plastic cards.
23. What is the monetary value or purchasing power of commodity money in comparison with
its material value?
The monetary value or the purchasing power of commodity money is the same as its material value.
24. What is the monetary value or purchasing power of token money in comparison with its
material value?
The monetary value or the purchasing power of token money greatly exceeds its material value.
25. What is one of the advantages of token money in comparison with commodity money?
Token money is much safer and more convenient to use in comparison with commodity money.

UNIT 12: MONETARY POLICY

26. What is the monetary policy?
Monetary policy which controls a nation’s money supply is supervised by each country’s Central
Bank.

27. What are the objectives (or goals) of monetary policy? 

The objectives of monetary policy are to promote economic growth and to keep inflation under
control.
28. What are main tools of monetary policy? 

The main tools of monetary policy are reserve requirements, discount rates and open market
operations.
29. What is reserve requirement? 

Reserve requirement is a certain percentage of deposits that the Central bank requires other banks to
keep in reserve.
Or: The reserve requirement set by the Central bank is the minimum amount of reserves as banks must
have.
30. What is the role of reserve requirements? 

The reserve requirements play a central role in how much money banks have to lend out
31. How can the Central bank make changes to the money supply by changing reserve
requirements?
By changing reserve requirements, the Central bank can increase or decrease the money supply.
32. What happens if the Central bank increases the reserve requirement?
If the Central increases the reserve requirement, it contracts the money supply; banks have to keep
more in reserve so they have less money to lend out.

25
 33. What happens if the Central bank reduces the reserve requirement?
If the Central bank reduces the reserve requirement, it expands the money supply; banks have to keep
less in reserve so they have more money to lend out.
34. What is the discount rate? 

The discount rate is the rate of interest the Central bank charges on loans that it makes to other banks.
35. What happens if the central bank increases the discount rate?
If the central bank increases the discount rate, it contracts the money supply.
36. What happens if the central bank reduces the discount rate?
If the central bank reduces the discount rate, it expands the money supply.
37. What will happen if the Central banks buy government securities?
If the Central banks buy government securities, the money supply will increase.
38. What will happen if the Central banks sell government securities?
If the Central banks sell government securities, the money supply will decrease.
39. What are open market operations?
Open market operations refer to the buying and selling of government securities by the Central Bank
on the open market.
40. What is a deposit?
A deposit is a sum of money which is in a bank account or savings account, especially a sum which
will be left there for some time.
41. How can banks encourage people to borrow and spend more money?
Banks can encourage people to borrow and spend more money by offering lower interest rates or
easier approvals.
42. How can banks restrict people to borrow and spend less money?
Banks can restrict people to borrow and spend less money by offering higher interest rates or more
difficult approvals.
43. Under what circumstance should monetary policy be expansionary?
Monetary policy should be expansionary when unemployment is high or economic growth is low
44. Under what circumstance should monetary policy be restrictive?
Monetary policy should be restrictive when inflation is too high.
45. What is expansionary monetary policy?
Monetary policy is expansionary when the Central bank reduces reserve requirements or discount
rates or buys more government securities.
46. What is restrictive monetary policy?
Monetary policy is restrictive when the Central bank increases reserve requirements or discount rates
or sells more government securities.
47. Who are depositors of a bank?
A bank's depositors are the people who have accounts with that bank.
48. What are objectives of expansionary monetary policy?
The objectives of expansionary monetary policy are to promote economic growth and create more
jobs.
49. What is the objective of restrictive monetary policy?
The objectives of restrictive monetary policy are to reduce inflation.
50. What can banks do if they are short of reserves?
If they are short of reserves, banks can borrow money from their bank (the Central bank).

26
UNIT 14
51. What is foreign exchange market (Forex)?
F.E.M is the market in which national currencies are exchanged.

52. Based on the operation of the markets, how are financial markets classified?
Based on the operation of the markets, financial markets can be divided into OTC markets and
organized markets.

53. What does OTC stand for?

OTC stands for “over the counter”

54. What is an OTC (over-the-counter) market? What are features of an OTC market?
An OTC market is the market in which transactions are made throughout the day and via
communication instruments such as telephone or computer link.
Or:
An OTC market is the market which hasn’t got fixed hours or a physical meeting place.

55. What is an organized market?

An organized market is the market with fixed hours (called trading sessions – phiên giao dịch), and a
physical place (called trading floors – sàn giao dịch)

56. What is exchange rate?

Exchange rate is the rate at which the currency of one country or region can be exchanged for that of
another country or region.

57. What are different types of transactions in a foreign exchange market?

2 types of transactions in Forex are spot transactions and forward transactions

58. What are spot transactions?

Spot transactions are undertaken for an actual exchange of currencies 2 business days (working days)
later.

59. What are forward transactions?

Forward transactions involve a delivery date further into the future.

60. What is the significance/ purpose of forward transactions?

Forward transactions help to protect the value of anticipated flows of foreign currencies from
exchange rate volatility.

61. What is one of reasons for the developments of the Forex?

- The development of world trade
Or: The expansion of international capital flows.

62. What is one of the reasons why London is the largest foreign exchange center in the world?
- the large volume of international financial business is generated in London.
Or: because of London’s geographic location.

63. What is international financial business generated in London?

International financial business generated in London include insurance, Eurobonds, banking and so
on

27
 64. What helps London to trade with many cities in the whole world easily?
The geographical location of London enables it to trade with many cities in the world easily. (London
is situated in Greenwich Mean)

65. What are different types of participants in the foreign exchange market?
There are 4 types of participants in Forex: the market maker, dealers, customers and brokers.

66. Who is a participant?

Participant is a person who takes part in or becomes involved in a particular activity.

67. Who is the market maker?

The market maker is the central bank of each country

68. What is the role of the market maker in Forex?

They establish the market and supervise the market operations by quoting the frame of exchange
rates at any time.

69. Why do market makers have to quote the frame of exchange rates at any time?
Because exchange rates (prices of currencies) are influenced by demand and supply of currencies in
the international market.

70. Who are dealers in Forex?

They are banks and some other organizations

71. How do dealers participate in Forex?

They buy or sell foreign currencies on their own accounts.

72. What purposes do dealers participate in Forex for?

They participate in Forex to make profits based on the differences between buying rates (bid rates)
and selling rates (offer rates).

73. Who are customers in Forex?

Customers can be multinational corporations, importers and exporters, and individuals.

74. For what purposes do multinational corporations participate in Forex?

Multinational corporations have demand of foreign currencies for the acquisition of financial and real
assets between parents companies and their subsidiaries.

75. For what purposes do importers and exporters participate in Forex?

Importers and exporters have demand of foreign currencies for making or receiving payments for
imports/ exports.

76. For what purposes do individuals participate in Forex?

Individuals may demand foreign currencies for their trips abroad, or for the purpose of saving.

77. Who are brokers in Forex?

The brokers are specialist companies who act as consultants for both banks and customers

78. How do brokers participate in Forex?

They give advice/ consultancy on exchange rates for their customers.

79. What purposes do brokers participate in Forex for?

They charge commission for their consultancy.

28
 80. What are bid rates (buying rates)?
Bid rate (buying rate) is the rate at which the bank will pay you when you go to it to sell a foreign
currency.
What are offer rates/ selling rates?
Offer rate/ selling rate is the rate at which the bank sells you a foreign currency.

81. What does the term “transaction” mean?

A transaction is a piece of business, for example an act of buying or selling something.
82. What does the term “volatility” mean?
Volatility is the quality or state of being likely to change suddenly, especially by becoming worse:

UNIT 15
83. Based on types of financial instruments, how are securities markets classified?
- They are classified into equity markets and debt markets
84. What are equity markets?
- Equity markets are the markets in which equity instruments (shares) are traded
85. What are equity instruments?
- Equities are shares of companies
86. What are debt markets?
- Debt markets are the markets in which debt instruments (công cụ nợ) are traded
87. What are debt instruments?
- Debt instruments can be bonds or mortgages and so on.
88. What are short-term debt instruments?
- They are instruments with the maturity of less than one year.
89. What are long-term debt instruments?
- They are instruments with the maturity of more than 10 years.
- What are intermediate-term debt instruments?
- They are instruments with the maturity from 1 to 10 years.
90. What are benefits for the creditors of a company?
- They receive fixed amounts of money including interest and principal payments at regular
intervals until the maturity date.
91. Can creditors intervene/ interfere in the company’s operations? Why?
- No, because the creditors have no right to vote on any issues of the company.
92. Why are equity instruments long-term securities?
- Because they have no maturity date.
93. What are benefits for the shareholders of a company?
- They receive dividends paid by the company and the likely rise in prices of shares.
94. How can shareholders get back their money?
- They can get back their money by selling their shares to someone else in the securities markets.
95. Can shareholders intervene/ interfere in the company’s operations? Why?
- Yes, because the shareholders have the right to vote on issues important to the firm and to
elect its directors.

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 96. Based on functions of the markets, how are securities markets classified?
Based on functions of the markets, securities markets are classified into primary markets and
secondary markets.
97. What are primary markets?
- They are the markets in which fresh securities are issued and sold to initial buyers.
98. Who can be initial buyers?
- They can be investment banks who underwrite fresh securities.
99. Can private investors access to information of the primary markets? Why?
- No, they can’t. The information in primary markets is confidential and fresh securities are only
sold to initial buyers.
100. How are primary markets important to issuers?
Or: What is the role of primary markets?
- Primary markets help issuers (government agencies or corporations) to raise more funds (by
issuing fresh securities)
101. What are secondary markets?
- They are markets in which previously issued securities (outstanding securities) are traded/
resold.
102. How are secondary markets important to issuers?
Or: What is the role of secondary markets?
- Although these markets don’t help issuers to raise more funds, they make securities more
liquid and desirable.
103. What types of markets are more popular for private investors? Why?
- Secondary markets are more popular because they can buy or sell (trade) outstanding
securities in secondary markets, but not in primary markets.
104. Based on operations of the markets, how are secondary markets classified?
- Based on operations of the markets, secondary markets are classified into Exchanges and OTC
markets.
105. Based on the maturity of financial instruments, how are securities markets classified?
- Based on the maturity of financial instruments, securities markets are classified into money markets
and capital markets
106. What are money markets?
- The money market is a financial market in which only short-term debt instruments are traded.
107. What are capital markets?
- The capital market is the market in which longer-term debt instruments and equity instruments are
traded.
108. What does the term “maturity” mean?
Maturity is the time when an investment or insurance will be paid back.
109. What does the term “mortgage” mean?
Mortgage is an agreement under which a person borrows money to buy property, esp. a house, and
the lender may take possession of the property if the borrower fails to repay the money.

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