18 Questions
Which payment mode in international trade involves a transfer of money from the buyer's bank account to the seller's bank account?
Banker's transfer
What is the key document required in a Bill of Exchange?
Letter addressed by banker to exporter
Which payment method is commonly used for imports in Ethiopia?
Letter of credit
In international trade, what kind of document specifies the nature, unit price, and total price of goods being shipped?
Letter of credit
Which payment mode in international trade involves a banker making a payment to an exporter against specific documents?
Letter of credit
What document is similar to a check and can be drawn by either individuals or banks?
Bill of exchange
Why is issuing currency to finance a deficit considered highly inflationary?
It leads to an increase in money supply, causing demand-pull inflation.
Which type of income tax policy levies an increasing percent of tax rate as income increases?
Progressive income tax rate
Who does a regressive income tax rate hurt the most?
People in the low-income brackets
Why does a progressive income tax rate hurt those with high-income brackets more?
It levies an increasing percent of tax rate as income increases.
How does a proportional income tax rate treat all incomes?
Levies a flat amount regardless of income level
What is the primary reason why issuing currency to finance deficits is not advisable?
It leads to high levels of inflation due to increased money supply.
What occurs when governmental expenditure is greater than government revenue?
Government budgetary deficit
How does external borrowing to finance a budget deficit affect the balance of payments?
It widens the balance of payments in current account deficit.
Which of the following is a consequence of the government borrowing funds from domestic sources to finance its deficit?
Rise in cost of credit in the domestic market
What effect does the 'crowding out effect' have on private investment?
Discourages private investment
Which sector experiences competition with the private sector when the government borrows from domestic sources?
Production activities
What is a key disadvantage of borrowing funds from international financial markets to finance a budget deficit?
Widens the current account deficit in the balance of payments
Test your knowledge on various categories in a government budget, including social services, other expenditures, and capital budget categories. Explore topics such as education, health, economic development, and general development.
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