· ~ST CODE 01240010

FORM TP 201310~ MAY/JUNE 2013

CARIBBEAN EXAMINATIO~s- COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®
EXAMINATION
PRINCIPLES OF BUSINESS
Paper 01 - General Proficiency '
1 hour 15 minutes

c 29 MAY 2013 (p.m.))

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This test consists of 60 items. You will have 1 hour and 15 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)
(B)
assets
capital
0® II@
(C) income
(D) resources
The best answer to this item is "income", so answer space (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, tum the page and work as quickly and as carefully as you can.
If you cannot answer an item, go on to the next one. You may return to this item later. Your

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score will be the total number of correct answers.

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

--===- Copyright © 2012 Caribbean Examinations Council

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All rights reserved.

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1. Private enterprise is run MAINLY to 6. Which of the following responsibilities

must be assumed by the management of a
(A) create profit company?
(B) reduce inflation
(C) provide jobs for more people I. Producing goods of a marketable
(D) distribute goods and services fairly quality
II. Maximizing efficiency and creating
surpluses
2. Which of the following types of business III. Determining dividends to be paid
environment is MOST typical of the to shareholders
Commonwealth Caribbean? IV. Maintaining good communication
and human relations with staff
(A) Corporate state
(B) Mixed economy (A) I and II only
(C) Centrally planned (B) II and III only
(D) Perfectly competitive (C) II, III and IV only
(D) I, II, III and IV

3. Which of the following features is NOT a 7. Selecting the objectives and the procedures
function of money?
for achieving goals is referred to as

(A) Indivisibility (A) planning

(B) Store ofvalue (B) orgamzmg
(C) Measure of value
(C) controlling
(D) Medium of exchange (D) motivating

4. In a public limited company, the losses are 8. The PRIMARY roleoftheHumanResources

borne by the Department of a firm is to

(A) staff (A) hire, recruit, train and motivate

(B) directors workers
(C) community (B) promote recreational activities for
(D) shareholders workers
(C) assist employees to understand
industrial relations
5. A MAJOR function ofthe Public Sector is (D) promote magazines highlighting
to outstanding workers

(A) make profits 9. A MAJOR role of a trade union 1s to

(B) serve the country encourage
(C) serve the interest of the shareholder
(D) inspire competition among busi- (A) staff to become members of the
nesses umon
(B) advancement of the welfare of its
members
(C) staff to strike whenever they have
problems at work
(D) management to pay higher salaries
and give longer vacations to staff

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10. Which ofthe following activities carried out 15. The condensation of the business plan is
in a firm will NOT be under the supervision contained in the
of the marketing manager?
(A) feasibility plan
(A) Packaging (B) marketing plan
(B) Purchasing (C) keynote summary
(C) Advertising (D) executive summary
(D) Distributing

16. A firm may change the main objectives from

11. Which ofthe following departments is NOT profit to market share if there is increased
a functional area of a business?
(A) government regulation
(A) Finance (B) cost of utilities and overheads
(B) Production (C) competition in the market place
(C) Public Relations (D) use of technology in the organiza-
(D) Human Resources tion

12. JB Auto Company decided to export 17. Kiki sustained bums while at work at a
car engines from Barbados to Trinidad. local fast food restaurant. Under which
Which of the following modes is BEST for of the following insurance policies is she
transporting the engines? LIKELY to be compensated?

(A) Air (A) Public liability

(B) Sea (B) Fidelity guarantee
(C) Rail (C) Property guarantee
(D) Land (D) Employers' liability

13. An entrepreneur may reduce his risk ofloss 18. A 'purchase order' is a
by
(A) request for additional goods
(A) planning ahead (B) notification of goods received
(B) securing bank loans (C) statement of debts outstanding
(C) sponsoring community projec!s (D) statement offering to buy goods
(D) purchasing additional fixed assets

19. Which of the following ways is NOT

14. Cash used to secure a loan at the bank is legitimate for terminating a contract?
referred to as
(A) Breach
(A) collateral (B) Performance
(B) fixed assets (C) Lapse of time
(C) fixed deposit (D) Change of mind
(D) current assets

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20. The monthly payments collected by an 24. The price of an article is usually high when
insurance company on behalf of its policy there is a
holders are known as
(A) small quantity for sale and few
(A) deposits people wanting to buy
(B) premmms (B) small quantity for sale and many
(C) instalments people wanting to buy
(D) endowments (C) large quantity for sale and few people
wanting to buy
(D) large quantity for sale and many
21. The term 'human resources' refers to people wanting to buy

(A) materials and goods made by

human beings 25. To which of the following industries does
(B) capital invested by shareholders in a firm involved in food processing belong?
a company
(C) raw materials used in the manufac- (A) Service
ture of goods (B) Extractive
(D) persons available for productive (C) Constructive
and professional services (D) Manufacturing

22. Which of the following results is LEAST 26. Producing, pricing, promotion and place are
likely to occur from growth in an components of
organization?
(A) market study
(A) Greater productivity (B) marketing mix
(B) More division of labour (C) market research
(C) Increased communication (D) sales promotion
(D) Increased capital investment

27. Which of the following commodities is a

23. Which of the following types of capital product of the manufacturing industry?
is used for the day-to-day operations of a
business? (A) Cars
(B) Gold
(A) Fixed (C) Lumber
(B) Floating (D) Houses
(C) Working
(D) Nominal

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28. Which of the following activities is NOT 32. Which ofthe following property rights gives
a function of the retailer? identity to a specific producer's goods?

(A) Selling in small quantities (A) Label

(B) Preparing goods for resale (B) Brand
(C) Providing a local supply of goods (C) Patent
(D) Transporting goods to suitable (D) Copyright
storage facilities

33. A 'market' in economic terms is defined as

29. Which of the following activities can be
described as marketing a product? (A) the business centre of the commu-
; nity
(A) Issuing bulletins on staff matters (B) a specific place where buyers and
(B) Distributing the commodities to sellers meet
outlets (C) a place where intangible goods are
(C) Publicising advertisements for new bought and sold
staff (D) a situation which exist when buyers
(D) Ensuring that workers are given and sellers influence the price of
fringe benefits goods

30. Which of the following operations is an 34. Which of the following factors is LEAST
example of sales promotion? likely to influence consumer behaviour?

(A) Warehousing (A) Product price

(B) Free sampling (B) Brand loyalty
(C) Servicing goods (C) Quality of goods
(D) Gathering information (D) Place of residence

31. Which of the following characteristics 35. Which of the following entities can have
BEST describes a perfectly competitive their shares traded on the stock exchange?
market?
(A) Partnerships
(A) Few sellers and many buyers (B) Public companies
(B) Difficult entry to new markets (C) Private companies
(C) Production of almost identical (D) Co-operative societies
goods
(D) Imperfect consumer knowledge of
pnces 36. Tom invests his savings by buying shares
in a company. From this investment, Tom
expects to receive

(A) profits
(B) interest
(C) revenue
(D) dividends

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37. Mr Jones has several bills of fixed amounts 41. Governments ccim influence business activity
to pay each month. His bank manager positively by reducing
agreed topaythemmonthlyfromMr Jones'
account. This service, provided by the bank, (A) taxes
is referred to as (B) grants
(C) spending
(A) overdraft (D) subsidies
(B) fixed deposit
(C) standing order
(D) letter of credit 42. A 'price control' may be defined as a

(A) tax on goods and services

38. Which ofthe following may cause the bank , (B) government ban of imports
to dishonour a cheque? (C) grant given to producers to reduce
their prices
I. Irregular signature (D) government limit on the price of
II. Cheque is postdated goods or services
III. Cheque is crossed
IV. Amount in words and figures do
not agree 43. Governments impose taxes for which of
the following reasons?
(A) I and III only
(B) II and IV only I. To encourage spending
(C) I, II and IV only II. To redistribute income
(D) II, III and IV only III. To promote economic growth ·
IV. To improve the balance ofpayments

39. The MAJOR role of the central bank is to (A) II and III only
(B) III and IV only
(A) issue notes and coins (C) I, III and IV only
(B) issue stocks and shares (D) II, III and IV only
(C) accept deposits accounts
(D) make loans and advances
44. Which of the following types of taxes is
paid on wages and salaries?
40. Investment can be defined as
(A) Income
(A) the stock of goods of a country (B) Corporation
(B) additions to the capital stock of a (C) Value added
country (D) Consumption
(C) the amount of money available at
a given time
(D) the amount of capital owned by the 45. Which of the following measures can be
government considered as incentives to industries?

(A) Increasing insurance premiums

(B) Devaluing local currency
(C) Increasing corporation tax
(D) Training employees

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Which of the following forms of taxation 51. Which of the following actions of
can be classified as 'direct'? government is MOST likely to lead to an
improvement in the standard of living?
(A) Income tax
(B) Excise duty (A) Printing more money
(C) Purchase tax (B) Increasing the income tax rate
(D) Customs duty (C) Abolishing taxes on low incomes
(D) Giving tax incentives to business

47. Which of the following forms of taxation

requires every employee to pay the same 52. Inflation can BEST be described as
PERCENTAGE of his salary in taxes?
(A) fluctuations in the general pnce
(A) Indirect level
(B) Regressive (B) a fall in the level of prices of goods
(C) Progressive and services
(D) Proportional (C) a general and sustained rise in the
level of prices
(D) changes in the level of prices of
.t8. A government can correct an adverse foreign goods and services
exchange problem by

(A) increasing customs duties 53. Education contributes to economic growth

(B) implementing price floors by ensuring that the workforce is highly
(C) improving the rate of inflation
(D) reducing severance payments (A) mobile
(B) efficient
(C) classified
49. A country has a favourable balance of trade (D) structured
when

(A) it sells more than it buys 54. Which of the following will NOT form part
(B) it buys more than it sells of a country's balance of trade?
(C) imported goods are cheaper
(D) there are no restrictions to trade (A) Remittances from abroad
(B) Earnings from the exportation of
rum
50. Which ofthe following practices would NOT (C) Payments for the importation of
contribute to the economic development and tobacco
growth of a country? (D) Payments for the purchase of over-
seas equipment
(A) Increased importation of consumer
goods
(B) Increased use of the country's 55. Which of the following methods can a
natural resources government use to reduce unemployment?
(C) Provision of more infrastructure
within the country (A) Increases in income tax
(D) Provision of loans and technical (B) Deflation of the economy
assistance for establishing local (C) Employment levy on firms
businesses (D) Increasedinterestrates on borrowing

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56. Which of the following trading agreements 59. Which ofthe following economic problems
is Barbados promoting when it sells are prevalent in the Caribbean?
furniture to Jamaica?
I. High levels of unemployment
(A) OECS Ii. Adverse balance of payments
(B) GATT III. Lack of capital for investment
(C) NAFTA IV. Low productivity in manufacturing
(D) CARICOM
(A) I and II only
(B) II and III only
57. To correct an adverse balance of payments (C) I, II and IV only
position, a government may (D) I, II, III and IV

(A) reduce credit

(B) increase exports 60. Which ofthe following organizations would
(C) reduce income tax settle a dispute among banana-producing
(D) increase the money supply countries of the Caribbean and Central
America over preferential agreement with
the European Union?
58. The term 'economic dualism' defines an
economy in which one sector is (A) World Trade Organization (WTO)
(B) Caribbean Development Bank
(A) highly dependent on local capital (CDB)
(B) highly dependent on foreign capital (C) CARICOM Single Market and
(C) overpopulated while the other is Economy (CSME)
under-populated (D) Organization of Pe trole um
(D) technologically advanced while the Exporting Countries (OPEC)
other is technologically retarded

END OF TEST

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

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