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FORM TP 201510s MAY/JUNE 2015

CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTItr'ICATE@
EXAMINATION
PRINCIPLES OF BUSINESS
Paper 01 - General Proficiency
I hour 15 minutes

27 MAY 201s (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

t. This test consists of 60 items. You will have t hour and l5 minutes to answer them.

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

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

4. On your answer 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 Item

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. If you want to change your answer, erase it completely before you fill 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
ffi
WT you cannot answer an item, go on to the next one. You may return to that item later.
3=S
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. : DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.
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:!!- Copyright @ 2013 Caribbean Examinations Council
I All rights reserved.
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1. Barter is BEST described as the 6. The policies of a company are formulated

by the
(A) purchase of goods and services
using cheques (A) auditors
(B) process of exchange involving the (B) directors
use of money (C) managers
(C) exchange of goods and services (D) shareholders
using notes and coins
(D) exchange of goods and services
without the use of money 7. Selecting the objectives and the procedures
for achieving goals is referred to as

2. Which of the following types of business (A) planning

environment is MOST typical of the (B) organizing
Commonwealth Caribbean? (C) controlling
(D) motivating
(A) Corporate state
(B) Mixed economy
(C) Centrally planned 8. Which of the following are benefits of
(D) Perfectly competitive written communication?

I. Instant feedback
3. WhichofthefollowingisNOTanobjective II. Provides evidence
of the public sector? IIL Useful for detailed messages .

(A) Maximizing profits (A) I and II only

(B) Providing essential services (B) I and III only
(C) Regulating business activity (C) II and III only
(D) Promoting economic growth and (D) I,II and III
development

9.
Which of the following organizations
4. Theterm'divisionoflabour'canbedefined is LEAST likely to use a management
as the information sYstem?

(A) organization oftasks in production (A) The national bank

(B) assemblingofgoodsfordistribution (B) A shoe-shine shop
(C) separation of tasks to complete a (C) A deparhnQnt store
job (D) AbeautY suPPlies outlet
(D) employment of different types of
workers

5. Which of the following is NOT a function

of money?

(A) Indivisibility
(B) Store of value
(C) Measure of value
(D) Medium of exchange

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Item l0 refers to the following diagram which shows a section of a typical vertical organizational
chart for a manufacturing company.

10. The relationship between the highest level of management down to the various departrrents is
known as

(A) line
(B) rank
(c) staff
(D) flow

11.. TheMAlNpurposeofinstallingasuggestion 13. Which of the following individuals benefit

box in a company is to get workers'views from having 'limited liability status'?
about
(A) Franchisees
(A) each other (B) Shareholders
(B) other companies (C) Ordinary parfirers
(C) ways of improving the workplace (D) Debenture holders
(D) ways of improving economic
conditions
14. Which ofthe following are functions ofthe
entreBreneur?

12. JB Auto Company decided to export I. Ensuringthatworkersareunionized

car engines from Barbados to Trinidad. U. Co-ordinating the factors of
Whichofthe following modes is BEST for production
transporting the engines? m. Undertaking risks by anticipating
demand
(A) Air
(B) Sea (A) I and II only
(C) Rail (B) I and III only
(D) Land (C) II and III only
(D) I, II and III

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15. The condensation of the business plan is 20. Which of the following factors prevents an
contained in the agreement from being considered a valid
contract?
(A) feasibility plan
(B) marketing plan (A) Consideration
(C) keynote summary (B) Legalpurpose
(D) executive summary (C) Misrepresentation
(D) Offer and acceptance

16. Cash used to secure a loan at the bank is

referred to as 21. The term 'human resources'refers to

(A) collateral (A) materialsandgoodsmadebyhuman

(B) fixed assets beings
(C) current assets (B) capital invested by shareholders in
(D) fixed deposits a company
(C) raw materials used in the
manufacture of goods
17. The monthly payments collected by an (D) persons available forproductive and
insurance company on behalf of its policy professional services
holders are known as

(A) deposits 22. The movement of educated, skilled people

(B) premiums to settle in other industrialized countries is
(C) instalments referred to as
(D) endowments
(A) migration
(B) brain drain
r8. Which of the following types of cheques (C) unemployment
allows an individual to receive cash on (D) underemployment
demand?

(A) Open 23. The amount of labour available for

.(B) Crossed productive activity is known as
(C) Certified
(D) Banker's (A) employment
(B) labour force
(c) labour movemgnt
19. Kiki sustained burns while at work at a (D) efficiency of labour
local fast food restaurant. Under which
of the following insurance policies is she
LIKELY to be compensated?

(A) Public liability

(B) Fidelity guarantee
(C) Properfy guarantee
(D) Employers'liability

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24. Productivity can be measured by 28. Which of the following terms describes
a market consisting of a large number of
(A) Inputs producers and consumers?
Outputs
(A) Oligopoly
(B) Inputs (B) Monopoly
Revenue (C) Perfect market
(D) Imperfect market
(C) Revenue
OutputS
29. Which of the following is an activity
(D) Outputs involved in marketing a product?
lnputs
(A) Issuing bulletins on staffmatters
(B) Distributingcommoditiestooutlets
25. Which of the following is a product of the (C) Publicizingadvertisementsfornew
manufacturing industry? staff
(D) Ensuring that workers are given
(A) Car fringe benefits
(B) Gold
(C) Tourist
(D) Lumber 30. Market equilibrium exists when

(A) buyers pay reasonable prices for

26. Product, price, promotion and place are goods
components of a (B) sellers are satisfied with the prices
paid for their goods
(A) market study (C) at the ruling market price, buyers
(B) marketing mix do not want to add to the stock
(C) market research of goods they already have
(D) sales promotion (D) at current prices, the amount buyers
wish to buy equals the amount
sellers want to sell
27. In the Caribbean, many people are hired
for sugar cane farming and very little
equipment is used. This industry can BEST 31. Which of the following is NOT a function
be described as of the retailer?

(A) labow intensive (A) Preparing goods for resale

(B) capital intensive (B) Selling in small quantities
(C) having low capital input (C) Providing a local supply of goods
(D) having high capital input (D) Transporting goods to suitable
storage facilities

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32. Which of the following gives.identity to a 37. MrJones has several bills offixed amounts
specific producer's goods? to pay each month. His bank manager
agreed to pay them monthly from Mr Jones,
(A) Label account. This service, provided by the bank,
(B) Patent refers to
(C) Brand
(D) Copyright (A) overdrafts
(B) letters of credit
(C) standing orders
33. A'market'in economic terms is defined as (D) acting as trustees

(A) the business cenft e ofthe community

(B) a specific place where buyers and 38. Which ofthe following services is provided
sellers meet by commercial banks?
(c) aplace where intangible goods are
bought and sold (A) Printing money
(D) a situation which exists when buyers (B) Selling stocks and bonds
and sellers influence the price of (C) Controlling the supply of money
goods (D) Accepting deposits from customers

34. Which of the following operations is an 39. A debenture holder is one who
example of sales promotion?
(A) is paid a fixed rate of interest
if the.
(A) Warehousing company makes profits
(B) Free sampling (B) must be paid any amounts owing
(C) Servicing goods to him in the following year
(D) Gathering information (C) has first claim on any profits and is
paid a fixed rate of dividend
(D) is entitled to a fixed rate of interest
35. Which of the following entities can have whether or not the company
its shares taded on the stock exchange?
makes profits

(A) Parnrerships
(B) Public companies 40. Invesfinent can be defined as
(C) Private companies
(D) Co-operative societies (A) the stock of goods in a country
(B) - additions to the capital stock of a
country
36. Tom invests his savings by buying shares (C) the amount of money available at
in a company. From this investment, Tom a given time
expects to receive (D) the amountofcapital owned by the
government
(A) profits
(B) interest
(C) revenue
(D) dividends

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41. Which of the following are measures used 45. Which of the following actions by
to protect the environment? govemment is MOST likely to lead to an
improvement in the standard of living?
I. Recycling
II. Deforestation (A) Printing more money
il. Water conservation (B) Increasing the income tax rate
(C) Abolishing taxes on low incomes
(A) I and II only (D) Giving tax incentives to businesses
(B) I and III only
(C) II and III only
(D) I,II and III 46. Which of the following forms of taxation
can be classified as 'direct'?

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

(B) Excise duty
(A) tax on goods and services (C) Purchase tax
(B) government ban of imports (D) Customs duty
(C) grant given to producers to reduce
their prices
(D) government limit on the price of 47. The provision of social services by
goods or services government does NOT include

(A) tax refunds

43. The success of government's economic (B) health clinics
policies can be MOST effectively measured (C) education and training
by (D) transportation facilities

(A) an increase in the level of policies

(B) anincreaseinthestandardofliving 48.
(C) adecreaseinthelevelofemployment
(D) a decrease in the volume of
roduction
44. Which of the following is a function of
Chamber of Commerce?
In the recent budget it was reported that
Sanfordlslandisanetimporter. Thismeans
that its
(A) exports are equal to imports
(B) exports are less than imports
a (C) balance of trade is favourable
(D) balance of payment is favourable

(A) Creating employment -

(B) Protecting the environment 49 . A country has a favourable balance oftrade
(C) Assisting in securing markets for when
- producers
(D) Providingfinancialaidtohurricane (A) it sells more than it buys
victims (B) it buys more than it sells
(C) imported goods are cheaper
(D) there are no restrictions to trade

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50. In calculating 'net national product', 54. Which of the following is NOT a benefit of
depreciation refers to the international trade?

(A) increase in the price level (A) Producers are able to increase their
(B) decrease in the price level market size.
(C) increase in capital stock value (B) Political links are developed with
(D) decrease in capital stock value other countries.
(C) Import restrictions can be imposed
on foreign items.
51. The'terms of trade'of a country refers to (D) A greater variety of goods is
the rate obtained from overseas.

(A) at which the counfiry's population

grows 55. Which of the following represents the
(B) oftumoveroflifeexpectancydue correct stages towards the development
to nutrition of the CARICOM Single Market and
(C) of income a country obtains from Economy?
increasing growth
(D) at which one country's goods (A) CARIFTA+Federation
and services are exchanged for CARICOM * CSME
another's
(B) CARIFTA---+CARICOM+
Federation 4 CSME
52. The difference between the value of a
countr5r's visible and invisible exports and (C) Federation-+CARICOM-+
the value ofits visible and invisible imports CARIFTA -* CSME
is referred to as the
(D) Federation -+ CARIFTA-->
(A) balance of trade CARICOM --+ CSME
(B) per capita income
(C) balance of paymerrts
(D) gross national product 56. Which of the following is a feature of eco-
nomic dualism in the Caribbean?

53. Which of the following methods is NOT (A) Small farming sector
used to measure a country's national (B) Urban-rural migration
income? (C) Rural-urban migration
(D) Large manufacturing sector
(A) Output
(B) Income
(C) Accounting 57. Which of the following terms defines a
(D) Expenditure continuous rise in the general level ofprices?

(A) Inflation
(B) Reflation
(C) Deflation
(D) Depression

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58. Which of the following countries are NOT 60. Which of the following or ganizations would
members of the Organization of Eastern settle a dispute among banana-producing
Caribbean States? countries of the Caribbean and Central
America over preferential agreement with
(A) Anguilla, Grenada the European Union?
(B) Barbados, Jamaica
(c) Montserrat, Saint Lucia (A) World Trade Organization (WTO)
(D) Dominica, Saint Vincent (B) Caribbean Development Bank
(cDB)
(c) CARICOM Single Market and
59. The purpose of CARICOM is to Economy (CSME)
(D) Organization of Petroleum
(A) allow member states to collaborate Exporting Countries (OPEC)
(B) allow for unrestricted movement
of persons among the
territories
(c) encourage the transfer oftechno lo gy
within the region
(D) foster interregional trade and
common services

END OF'TEST

IF YOU FINISH BEFOR.E TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

0t240010tF 2015