CIMA Fundamentals of Business Economics (BA1) Practice Exam

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• Which description best defines a histogram?
• The real interest rate represents:
• In the balance of payments, the capital account records?
• Which negotiation approach involves taking turns to focus on different stakeholders to resolve conflicts?
• Which type of trade arrangement has no common external tariff to non-members?
• What is dividend yield?
• RPI stands for which of the following?
• Which term describes industries in the early growth stage within the context of trade?
• What is the effect of replacement investment on the economy?
• Sunset industries are...
• Which statement about network organizations is most accurate?
• Which of the following is an injection into the circular flow?
• Which of the following is a non-deposit taking financial intermediary?
• Broad Money (M4) comprises which?
• In central bank supervision, liquidity refers to what?
• Which statement best defines big data?
• According to transaction cost theory, what strategic decision does it analyze?
• Time series analysis is primarily used to:
• Which of the following is NOT an example of protectionism?
• Which of the following is NOT a monetary policy tool?
• In the seven-step data processing sequence, which step is the last?
• Which technique is an external hedging method?
• Dividends are best described as?
• Which of the following is listed as a disadvantage of unrestricted international trade?
• Netting inter-company transactions is an internal hedging technique where matching is done by a central treasury.
• An IRG is best described as:
• Which bloc is defined by the free movement of factors of production, enterprise and services?
• Which option lists the two main drivers of economic growth?
• The rank correlation coefficient (Rs) is used to measure what?
• Which of the following is an example of fiscal policy aimed at promoting economic growth?
• Primary stakeholders are those who have a direct interest in the business and include which groups?
• Which type of competency is described as being outsourced to anyone?
• Sinking funds involve:
• Which description best captures GDP?
• As income increases, consumption
• The International currency market is made of which two markets?
• Money Market is primarily used for:
• Internal stakeholders include which groups?
• Which statement describes demand-pull inflation?
• What characterizes the recovery stage of the business cycle?
• Which statement best describes the Commodity Market?
• Which of the following is an example of market failure?
• Which statement best describes diseconomies of scale?
• Macroeconomics focuses on decisions made by the government and their effects.
• Quantitative easing involves which action?
• Net present value (NPV) analysis
• What does clearing enable in the banking system?
• Types of Injections into the circular flow.
• Which of the following is a factor affecting price elasticity of demand?
• Which statement describes the benefit of specialisation in international trade?
• Which statement about data types is true?
• What is the effect of the central bank buying treasury bills?
• Debentures typically have which characteristic?
• In the linear demand equation Qd = a - bP, what does b represent?
• What is a typical government response to stagflation?
• Moving averages help to reveal which component of a time series?
• Raising the capital adequacy ratio would have which effect on banks' lending capacity?
• What is the central bank's role as a last resort for banks?
• One advantage of trading blocs is that negotiations occur at the bloc level rather than with every single country.
• Which of the following is a good data characteristic?
• Spurious correlation occurs when?
• Which is a negative of economies of scale?
• An increase in consumer income for a normal good leads to:
• Cost-push inflation can be caused by which factor?
• The forward premium/discount is ...
• Which graph plots cumulative frequencies and uses running totals?
• What is the main source of government funds?
• Which of the following is an example of government budget allocation among departments?
• If the value of x equals 1, PES is unit elastic.
• What is the wage-price spiral?
• Which of the following is NOT an internal economy of scale?
• Aggregate supply is defined as the total supply of goods and services that firms in a national economy plan on selling during a specific time period. Which option correctly describes this concept?
• When a price ceiling below equilibrium is enforced, which phenomenon is likely to emerge?
• Which task involves holding foreign currency reserves and issuing currency?
• Negative equity occurs when
• Primary stakeholders have a direct interest in the business and include internal and connected stakeholders.
• Which statement defines a regional trade bloc?
• Which external source category provides unemployment rates and tax rates?
• Which pair of metrics are commonly used to measure inflation?
• Which statement about transaction cost and task specificity is correct?
• Which pair is a classic example of complementary goods?
• The purpose of hedging with FRAs, IRGs, futures, and options is to:
• Boom stage unemployment question
• Which statement correctly contrasts GDP and GNP?
• In the banks hierarchy, which is a subdivision of Commercial Banks?
• NAFTA is an example of which type of trading bloc?
• Which market is for new financial instruments being sold?
• Deflation is a policy option that reduces demand and can negatively affect economic growth.
• The balance of payments is best described as the value of the difference between what?
• Which statement is true about complementary goods?
• Which statement directly affects the level of supply in a market?
• An improvement in production technology generally causes the supply curve to shift:
• Off-shoring involves relocating production to another country primarily to achieve which objective?
• Which statement best describes nominal return?
• Which statement is a pro of using Net Present Value (NPV)?
• Which of the following is an alternative to outsourcing?
• Mezzanine financing typically carries interest in the range
• Which FX risk arises from changes in exchange rates affecting prices and competition in international markets?
• Which combination tends to stimulate investment?
• Which statement about the Money Market is correct?
• An increase in production costs will cause the supply curve to:
• In the short run, some fixed costs exist. Which option reflects this?
• When IRR results contradict NPV, which measure should be preferred?
• In the seven-step data processing sequence, which step allows users to search through the data?
• A unit tax is best described as:
• Which type of financing arrangement includes leasing and hire purchase agreements?
• Eurocurrency market characteristics?
• Rank correlation coefficient (Rs) measures what?
• A balance of payments deficit occurs when imports exceed exports.
• Which of the following is a role of the central bank?
• Investment capital refers to funds used for:
• What is included in the current account besides goods?
• Fiscal policy is the management of the economy through which instruments?
• In a Command Economy, whom dictates the quantity supplied and prices paid?
• Off-shoring involves relocating production primarily to achieve which objective?
• What are the two listed types of shares?
• According to the material, IRR is considered secondary to NPV if results contradict because NPV directly relates to wealth.
• Which example best illustrates a public good?
• Devaluing the exchange rate typically leads to a decrease in short-term interest rates.
• Which external source would provide economic forecasts and stock market prices?
• Which type of competency would most likely be outsourced to an expert?
• Asset management function is described as funds to create a portfolio of long-term investments with any surpluses that arise. Which option matches this definition?
• Which factor tends to encourage saving?
• Which of the following is a central bank function related to the government?
• In the long run, increasing production capacity tends to make price elasticity of supply:
• Which of the following is NOT a type of competency?
• Which statement about ordinary shares is true?
• What does the principal-agent issue refer to in corporate governance?
• Monetary policy is defined as using which tools?
• Which of the following are considered other drivers of economic growth?
• A price index measures changes in what?
• Inflation is defined as which of the following?
• Which description best fits a merit good?
• If aggregate supply shifts to the right, which effects occur?
• Eurobond market maturity?
• Which of the following is NOT typically considered a factor of consumption?
• Export performance measures which aspect?
• Supply-side policies are likely to cause inflation.
• A perfectly elastic price elasticity of supply is represented by which type of line on a graph?
• Import penetration measures what aspect of imports?
• Which of the following is a commonly cited disadvantage of IRR?
• Where are securities traded after their initial sale?
• Bills of exchange are commonly used in which area?
• Which is an example of withdrawal from the circular flow?
• Nominal return is best described as?
• Counter trading is a hedging technique that involves trading goods or services to offset exposures.
• Which statement describes a Private Limited Company?
• Which external source category would include trade journals and information on new materials?
• Which statement correctly describes the discount factor?
• How does perceived risk generally affect the market price of a share?
• Which statement correctly describes elastic vs inelastic demand?
• Which statement about primary data is false?
• Which statement best describes monetary policy?
• Which of the following is a pro of outsourcing?
• Which statement is NOT listed as a use of big data?
• In regression analysis, the coefficient of determination (r^2) represents?
• Which market is made up of banks holding currency outside the country of issue and is not subject to domestic reserve requirements?
• Which techniques are used for evaluating investments?
• Which of the following is an example of 'Other forms of Financial Intermediaries'?
• What is another name for a discount house?
• If PES equals zero, the supply curve is:
• GNP is defined as which of the following?
• Which statement best describes the primary role of a network organization?
• Which of the following is an example of 'Other forms of Financial Intermediaries'?
• The payoff for an IRF is typically based on:
• Which of the following are examples of financial products?
• During a recession with weak demand, which statement best describes inflation?
• An index number is primarily used to?
• A rightward shift of the aggregate supply curve in the short run leads to which combination?
• In the seven-step data processing sequence, which step is primarily about presenting data visually to users?
• Equilibrium price is the price where quantity supplied equals quantity demanded.
• Typical mortgage tenure is
• Which policy aims to prevent oversupply of agricultural products?
• Which statement correctly defines an index number?
• Which statement best captures the effect of economies of scale?
• What is the discount factor?
• Which of the following is a potential downside of trading blocs?
• What is a positive technological impact of globalization?
• Which pair of risks describes investing in a company?
• Which of the following is a demerit good example?
• Voluntary export restraint agreements are ...
• What is the main objective of a company?
• Floating exchange rates are defined as
• External stakeholders include which groups?
• Stakeholders are defined as ...
• What is the function of the lender of last resort?
• Treasury bills are
• In the short run, which statement is true about costs?
• Long-run aggregate supply is defined as the period after maximum quantity produced.
• Economies of scale help you find the optimum size for your business. True or false?
• What does limited liability mean for owners?
• Types of Withdrawals from the circular flow.
• The financial system is made up of the organizations and procedures that facilitate transactions among investors, lenders, and borrowers. Which option best represents this concept?
• Which of the following is an external factor causing diseconomies of scale?
• Which of the following is a factor used to determine the price elasticity of demand?
• In a free market economy, who dictates prices?
• Which statement best describes a single market?
• Which of the following is a capital market instrument?
• Which of the following is one of the six key areas to consider how changes affect a business?
• Bill rate for a coupon-paying bond is equal to which of the following?
• If the central bank borrows to reduce the currency in circulation, what is the typical effect on interest rates?
• Setting a maximum price is often justified to achieve which outcome?
• Which category of goods is least affected by income changes during the business cycle?
• If a company has a high credit rating, what does this imply about default risk?
• What is the effect of the central bank selling treasury bills?
• Marginal cost is typically the same as which type of cost?
• A balance of payments surplus occurs when exports are greater than imports.
• Property tax is defined as a tax on
• Which instrument is a short-term, unsecured instrument issued by large corporations?
• Which type of trade arrangement imposes a common external tariff to non-members?
• What does the capital adequacy ratio measure?
• Which statement best describes economies of scale as a benefit of international trade?
• Which statement about aggregate supply is true?
• Which item is NOT part of the financial account in the balance of payments?
• Which level of economics deals with decisions made at the company level?
• If demand increases while supply is fixed, the equilibrium price tends to:
• Which policy is a common government intervention to support farmers when market price is low?
• Which statement best defines Gross Domestic Product (GDP)?
• Which statement best describes market failure?
• Earnings per Share (EPS) shows profits available to whom?
• Which option correctly describes import penetration versus export performance?
• Which of the following is a cost of economic growth related to how gains are distributed?
• Which organization is described as promoting global trade between nations?
• External economies of scale arise from factors outside the firm. Which of the following is an external economies of scale?
• In the seven-step data processing sequence, which step focuses on organizing data?
• Dirty floating is best described as?
• The FOREX Market deals with which activity?
• The cash ratio is defined as the ratio of cash and liquid assets to what?
• Which statement best defines complementary goods?
• Which tax can be single-stage and multi-stage through manufacturing?
• Which situation represents a barrier to entry created by economies of scale?
• The Retail Price Index (RPI) basket includes which of the following components?
• The base rate interest rate is best described as which?
• A potential issue with devaluation is that it may not affect demand if demand is inelastic.
• Which cost represents the total of fixed costs and variable costs?
• What is a typical effect of unemployment on tax revenue?
• What is the primary purpose of the FOREX market?
• A derivative is best described as?
• Interest Rate Futures (IRF) are:
• As investment risk rises, what do shareholders require?
• External stakeholders are often characterized by
• Which option describes ad valorem taxes, such as sales tax?
• Which service is typically provided by wholesale banks rather than retail banks?
• Which market is typically associated with medium to long-term funding and securities?
• Which statement about forward exchange contracts is true?
• Internal rate of return (IRR) is defined as
• Which activity is listed as a factor of currency demand most directly linked to trade flows?
• What best describes stagflation?
• What elasticity value represents unit elasticity?
• FOREX Market serves which primary purpose?
• Which of the following is listed as a con of IRR?
• Which share type is described as special, not always available, paid before ordinary shares, and has no voting rights?
• Which instrument is a contract between two parties that determines the rate for a future start date?
• Which factor is most likely to encourage saving?
• Which cost is defined as the cost of producing one more unit?
• Which is a positive of economies of scale?
• What is a key feature of a shared services organization?
• Protectionism is best described as:
• Which policy action would slow economic growth?
• Which of the following are components of the financial system?
• Which statement describes demand-pull inflation?
• Forward exchange contracts are...
• Which type of bank focuses on large, complex transactions such as mergers and reorganisations?
• Which of the following is NOT an external economy of scale?
• True or False: Gross redemption yield allows investors to see if the overall yield equals the required yield.
• Which statement is NOT true about certificates of deposit?
• Which statement describes an inflationary gap?
• The accelerator describes
• In the long run, which statement is true?
• The government uses ______ as intermediaries.
• What type of loans does the Eurocredit market offer?
• Key Players (in Mendelow's Matrix) are stakeholders with which characteristics?
• Gov Policy Effectiveness is based on
• Which statement best describes the concept of economies of scale?
• Allocative efficiency describes which of the following states of an economy?
• Derivatives Market is defined as?
• In currency supply factors, which statement is correct?
• What are the three key challenges identified by Gartner for data?
• Which share type is paid out before ordinary shares and typically has no voting rights?
• Which statement best describes a competition policy response to monopolies?
• Currency options give the owner the right to exchange at a pre-agreed rate. Which statement is correct?
• Which of the following is a typical consideration when outsourcing?
• What is a primary function of the international capital market?
• Consumption is defined as which of the following?
• Which market trades instruments whose value derives from underlying assets?
• Which statement best describes a barrier to entry for new firms?
• Which scenario is cost-push inflation?
• A government budget surplus during the boom stage is likely.
• Which statement about aggregate demand is correct?
• In a credit agreement, what term describes an asset held to secure repayment of the debt?
• The credit multiplier effect is determined by which factors?
• What characterizes the international money market?
• A certificate of deposit is typically characterized by which feature?
• Which term describes 'side payments' in stakeholder negotiation?
• How do financial intermediaries raise funds according to the material?
• Which of the following is NOT a factor of internal diseconomies of scale?
• In a network organization, success largely depends on what?
• A true statement about mortgages is that they
• Which term refers to funds needed for everyday costs such as wages and raw materials?
• Which statement correctly describes a regional trade bloc's level of integration?
• Broad Money (M4) comprises which?
• If public spending is cut, which category of goods is most likely to be affected?
• Which option best defines internationalisation?
• Final yield on a corporate bond is equal to which of the following?
• The longer you wait for a return, the higher the amount expected back. Which statement reflects this relationship?
• The net dividend yield equals what, expressed as a percentage?
• Which statement about secondary data is true?
• Economics is primarily concerned with what?
• A merit good is best described as which?
• Insurance Marketplace primarily functions to?
• Which of the following is a money market instrument?
• Wealth tax is a tax based on
• During inflation, which statement about investment is commonly observed?
• Which of the following is not a type of incorporated company?
• What is a key feature of an incorporated company?
• Sunrise industries are new industries that have grown up during the development of new technology and face difficulty becoming competitive globally.
• Taxation is used to raise funds for government to: allocate resources efficiently, distribute income, and manage the economy.
• Boom stage true statement.
• The multiplier definition.
• A rise in production costs will cause the supply curve to shift to the left, which means:
• Which factor is a driver of international trade and globalisation?
• Which type of unemployment occurs when a worker is between jobs by choice?
• Which statement is true about the aggregate quantity index?
• Which of the following is a deposit-taking financial intermediary?
• Which two metrics are used as short-term performance measures to gauge shareholder wealth?
• At equilibrium, aggregate supply equals aggregate demand and equals which measure?
• Credit rating agencies assess the likelihood of default. Which statement best describes their purpose?
• Which measure includes income earned by residents abroad?
• What is a long-term performance metric goal for a company?
• The quantity/volume index measures change in which type of items?
• What leads to a shift in the aggregate demand curve?
• The purpose of trade agreements or blocs is to?
• What is the primary objective of shareholders?
• Mezzanine financing is best described as
• Which policy changes the value of the domestic currency to influence the balance of payments?
• What is the real interest rate equal to?
• What is the purpose of the balancing item in the balance of payments?
• A Monopolies question: which statement defines a monopoly?
• Open market operations involve the central bank buying or selling government securities to influence which variable?
• Which feature is associated with a single market?
• The base rate is the rate around which all rates are set. True or False?
• Direct taxes are taxes on earnings or increases in wage; which of the following is an example?
• Gross redemption yield takes into account which of the following?
• Which of the following is listed as a benefit of globalisation related to product quality and employment?
• Short-run aggregate supply refers to the period before maximum quantity produced.
• Long-term international financing typically refers to which market?
• Which FX risk can be mitigated by netting assets?
• Which of the following is an external stakeholder?
• Which of the following constitutes an injection in the circular flow model?
• Which statement best defines a virtual organization?
• Which is a protectionist policy?
• What is the primary goal of corporate governance?
• Which of the following are factors that affect aggregate supply?
• In a shared services organization, what happens to repeated services?
• The Commodity Market is a financial market that trades in which of the following?
• Which instrument is listed as a capital market instrument alongside ordinary shares and bonds?
• A correlation coefficient of -0.8 indicates which type of relationship?
• If aggregate supply shifts to the left, which effects occur?
• Which statement best describes flexible staffing?
• Which item is an internal source of information?
• Bounded rationality implies decision making is limited by what factors?
• NOT a purpose of the FOREX market?
• Perpetuity is defined as
• In the recession stage, which of the following typically occurs?
• Which statement best defines Gross National Product (GNP)?
• Which statement best distinguishes direct taxes from indirect taxes?
• NOT an injection into the circular flow?
• In mezzanine financing, the lender is entitled to a share of equity, which can become collateral if default occurs. This describes
• Which formula represents Present Value of a future amount?
• If a bond has a low credit spread, what can be inferred?
• Which central bank function involves debt management?
• Which concept explains why consumption tends to rise when income rises?
• Which description best captures Mixed Economy?
• Hot money refers to?
• Which is a typical function of financial institutions?
• Which are types of incorporated companies?
• Interest rate options give the buyer the right to:
• Which market enables smaller, growing companies to access public investment pathways?
• Loan stock is best described as
• Which of the following is NOT a factor affecting aggregate demand?
• If the price elasticity of supply value is less than 1, the supply is:
• Which internal hedging technique matches receipts to reduce the amount that needs to be converted?
• Which statement describes indirect taxes?
• Which of the following is a type of financial market?
• What are the two main types of index numbers?
• Which statement about primary data is true?
• ROCE tells how well capital is used to generate profits. Which option best reflects this statement?
• Which policy action increases injections into the economy?
• Transaction risk refers to the time delay between entering into a contract, settling, and paying more than expected as exchange rate changes.
• Not a main currency supply factor?
• Which of the following correctly lists the components of aggregate demand?
• Hedging is an investment which reduces or manages foreign exchange risk.
• National Income is defined as which of the following?
• Which of the following is a criterion for choosing a base year?
• Public finance is primarily concerned with what?
• What determines the reserve requirement for a commercial bank?
• The current account includes?
• Which of the following would best identify the underlying long-term trend in data?
• If demand grows, but there is no supply to fill it, leads to inflation.
• An economy that is growing too quickly may experience what?
• In internal hedging, invoicing in home currency passes FX risk to the customer.
• The importance of a stakeholder's opinion depends on what?
• Which is a pro of a monopoly?
• Which of the following is an impact of liberalisation of markets under globalization?
• Which of the following is a pro of trading blocs?
• Which of the following groups is associated with international financial stability rather than broad trade liberalization?
• Which scenario would increase GDP but not GNP?
• Which statement about the relative quantity index is true?
• Which statement is true about sales tax described as ad valorem?
• Which of the following is a feature of debentures?
• What does Return on Capital Employed (ROCE) indicate?
• Reducing currency supply by borrowing more leads to what outcome?
• Which type of unemployment arises from a mismatch between skills and available jobs due to structural changes in the economy?
• Which service is commonly offered by retail banks?
• Which statement is true about public goods?
• Which policy is listed as a way the government can manage the balance of payments?
• Who can issue eurobonds?
• In the international capital market, who are the borrowers?
• National income is at its maximum when which event occurs?
• During an economic boom, which government policy is used to reduce aggregate demand?
• The government loosening the rules on cash creation can encourage more money in the economy. True or False?
• Trade Cycle (4 steps) sequence?
• Which statement best describes equity finance?
• An issue with devaluation discussed in the material is that producers may not pass devaluation to customers.
• Excise duties are taxes levied on
• What is the CPI based on?
• Which policy option is a form of protectionism used to influence the balance of payments?
• Market expectations can influence the supply curve. Which statement best reflects this concept?
• Which statement describes an economic union?
• During the boom stage, which of the following is observed?
• Which of the following describes a function of the central bank?
• Running yield is calculated as which of the following?
• Which is an injection into the circular flow?
• Which of the following is a factor affecting aggregate demand?
• What is a potential effect of mergers and acquisitions on the public interest?
• What happens to the required rate of return as investment risk rises?
• Which is a direct effect of unemployment on tax revenue?
• Which of the following is a form of calculating returns on bonds?
• Which two measures are commonly used to gauge economic growth?
• Which of the following describes Gross National Product (GNP)?
• The aggregate supply curve can be split into two concepts. Identify them.
• Which of the following is NOT an outsourcing business structure?
• Which of the following is a problem of inflation?
• Which statement defines a current liability?
• Which statement best describes globalisation?
• Net dividend yield is defined as which formula?
• Which area is not listed among the six key areas to consider how current or future changes will affect a business?
• Narrow Money (M0) includes which of the following?
• Index splicing serves to
• Which of the following describes elastic demand range according to the material?
• What best describes Mixed Economy?
• Leading hedging involves paying in anticipation of exchange rate change.
• Consumption tax is a tax on
• If a maximum price is set below the market equilibrium price, which outcome is most likely?
• Which statement about IRR is true?
• Monopolies can influence prices by which of the following?
• Translation risk is the risk that assets held in foreign currency will change in value as exchange rates fluctuate.
• Which of the following is true about excise duties?
• What type of company seeks funding by issuing public shares?
• Which of the following is a type of share in the capital market?
• Which statement is true about a virtual organization?
• A shareholder is best described as which of the following?
• Time series analysis involves what?
• Which statement defines core competencies in the context of this topic?
• Connected stakeholders include which of the following?
• The coefficient of determination, denoted r^2, measures which of the following?
• Which statement about economies of scale is true?
• Which statement best describes the 'financial account' component in the balance of payments?
• Allocative efficiency can be described as which of the following?
• Elasticity measures how one variable responds to changes in another variable, such as price.
• Which statement is a drawback of NPV?
• Which of the following describes long-term trend in a time series?
• Dumping in international trade is defined as:
• When using moving averages to analyze seasonal variation, the seasonal component is calculated as which of the following?
• What best describes economies of scale?
• How do internationalisation and globalisation differ, according to the material?
• In the long run, which statement is true about costs?
• Which negotiation approach involves taking turns to focus on different stakeholders?
• Which of the following is one of the six types of financial markets listed?
• Which statement describes limited liability?
• Which are factors affecting share values?
• Depression phase feature.
• Which cost is the cost per unit on average?
• Moving averages are used to?
• A bill of exchange can be sold to a financial intermediary for instant cash.
• Which statement describes a bill of exchange?
• An economy in equilibrium occurs when injections = withdrawals.
• Which of the following is a typical government response to a recession?
• Which statement best describes economies of scale in practice?
• When aggregate supply is at its maximum, which statements are true?
• Which is a potential consequence of protectionism?
• If government expenditure increases while other factors remain constant, what happens to aggregate demand?
• Which is an example of a free-trade area?
• Which department is commonly associated with internal economies of scale through bulk purchasing?
• Internal stakeholders include which group?
• In moving-average seasonal analysis, which option represents seasonal variation?
• Which statement about GDP and GNP is true?
• What is Mendelow's Matrix primarily used to categorize stakeholders based on?
• Which outcomes are associated with motivation diseconomies when a firm grows?
• An Interest Rate Guarantee (IRG) is:
• Main factors of currency supply?
• ROCE stands for:
• Which statement accurately describes ordinary shares?
• Which is a merit good provided through public finance?
• Which type of bank provides currency conversion and large trade transactions for corporates?
• Return on Net Assets (RONA) is associated with which outcome?
• What best describes a credit spread?
• An annuity is described as which of the following?
• Which of the following is listed as a benefit of international trade?