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JANUARY 2018
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CARIBBEAN EXAMINATIONS COUNCIL
CARIBBEAN SECONDARY EDUCATION CERTIFICATE@
EXAMINATION

PRINCIPLES OF BUSINESS

Paper 02 - General Proficiency

2 hours

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This paper consists of FIVE questions. AnswerALL questions.

2 Write your answers in the spaces provided in this answer booklet.

a
J Do NOT write in the margins.

4 You are advised to take some time to read through the paper and plan your answers.

5 If you need to rewrite any answer and there is not enough space to do so on the
original page, you must use the extra lined page(s) provided at the back of this
booklet. Remember to draw a line through your original answer:

6 If youuse the extra page(s) you MUST write the question number clearly in
the box provided at the top of the extra page(s) and, where relevant, include
the question part beside the answer.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright @ 2017 Caribbean Examinations Council

All rights reserved.

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r AnswerALL questions.
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1. (a) Define EACH of the following terms:

(i) Goods

(2 marks)

(ii) Services

(2 marks)

(b) Outline ONE advantage and ONE disadvantage of e-commerce.

Advantage

Disadvantage

(4 marks)

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 r (c)
5

State TWO characteristics of EACH of the following types of economic systems:

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(i) Planned economy

(2 marks)

(ii) Free enterprise

(2 marks)

(iii) Mixed economy

(2 marks)

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r (d)
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Explain TWO ways in which businesses can contribute to the social and economic development
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of a country.

(6 marks)

Total20 marks

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 r 2. (a) Define EACH of the following legal concepts:
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(i) Counteroffer

(2 marks)

(ii) Invitation to treat

(2 marks)

(b) Describe TWO characteristics of a simple contract.

(4 marks)

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r (c) (i)
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State TWO characteristics of a specialty contract.

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(2 marks)

(ii) Give TWO examples of a specialty contract.

(2 marks)

(d) Describe ONE type of mistake in a contract.

(2 marks)

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(e) John agreed to deliver goods for Mary at a specified date and time. He fell ill and failed to
deliver the goods at the agreed date and time. He eventually delivered the goods at a much
later date.

Explain TWO ways in which this contract was discharged or terminated.

(6 marks)

Total20 marks

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3. (a)
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Identifu THREE industries in the Caribbean that have developed from EACH of the following
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productive activities :

(i) Farming

(3 marks)

(ii) Mining/quarrying

(3 marks)

(b) Outline TWO benefits of linkage industries to Caribbean economies.

(4 marks)

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 r (c)
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List FOUR factors which should be considered when determining the location of a business.
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(4 marks)

(d) Many businesses start small and later develop into large businesses. Explain ONE positive
effect and ONE negative effect of growth on a business.

Positive effect.......

Negative effect

(6 marks)

Total20 marks

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4. (a) Define EACH of the following terms:
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(i) Investment

(2 marks)

(ii) Savings

(2 marks)

(b) IdentiS, TWO sources of capital in EACH of the following markets:

(i) Money market

(2 marks)

(iD Capitalmarket

(2 marks)

(c) State TWO factors which could determine how much capital a firm borrows.

(2 marks)

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 r (d)
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Describe TWO methods used by central banks to regulate the activities of commercial banks.
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(4 marks)

(e) Explain ONE benefit and ONE risk of using the stock market for investment.

Benefit

Risk

(6 marks)

Total20 marks

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s. (a) Define EACH of the following terms
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(i) Economic growth

(2 marks)

(ii) Economic development

(2 marks)

(b) List the THREE methods by which governments measure the national income of a country.

(3 marks)

(c) State THREE reasons why countries engage in international trade.

(3 marks)

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 r (d)
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Distinguish between 'balance of trade'and 'balance of payments'

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(4 marks)

(e) Explain TWO measures a country may adopt to address its balance of payments problems.

(6 marks)

Total20 marks

EI\ID OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CIIECK YOUR WORK ON THIS TEST.

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