Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

(2 marks) 
92 
Which of the following would best summarise the effect of expectations on a country’s 
economy? 
A 
Expectations effect has no influence on the economic development 
B 
If a government is expecting the citizens’ incomes to rise, it will try to adjust the 
taxation levels as to decrease the amount to be collected 
C 
If a company expects its trade contract to be terminated, it will take actions to find 
another customer 
D 
If people collectively expect the economy to develop in a certain way, they will act in 
a manner that will facilitate this change
 (2 
marks)
93 
What fiscal policy would be best used when trying to address a deflationary gap? 
A 
Running a budget surplus 
B 
Having a budget deficit 
C 
Lowering interest rates 
D 
Raising interest rates 
(2 marks)
Download Free Acca,ca study materials from WWW.ACCOUNTANCYWALLS.COM

---

P AP E R F 1 ( F A B ) :
AC COU N TAN T IN B US INES S
 
22
KA P LA N P UBL I SH IN G 
94 Increases in unemployment, reduced demand, falling household incomes and low 
business confidence and investment are associated most strongly with which of the 
following? 
A High 
interest 
rates 
B 
Increase in the money supply 
C 
A budget deficit 
D Recession
 (2 
marks) 
95 
Which group is usually most adversely affected by high rates of inflation? 
A 
The poor and those on fixed incomes 
B 
Individuals with substantial share portfolios 
C Small 
businesses 
D Large 
businesses
 (2