Lesson 3.12.1

3.12.1 Economic factors Quiz: OCR Business, Unit 3

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.12.1, Economic factors: 20 multiple choice questions for the OCR Business (H431), Unit 3: External influences, written with Revision Ninja.

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The 20 questions

  1. What term describes a tax levied directly on personal income or corporate profits?

    • Direct tax
    • Excise duty
    • Value added tax
    • Indirect tax

  2. What type of UK tax is Value Added Tax paid on consumer purchases?

    • Indirect tax
    • Capital tax
    • Direct tax
    • Progressive tax

  3. Which policy tool involves government decisions regarding taxation and public spending levels?

    • Monetary policy
    • Supply-side policy
    • Regional policy
    • Fiscal policy

  4. Which policy uses interest rates and money supply adjustments to manage economic activity?

    • Fiscal policy
    • Supply-side policy
    • Environmental policy
    • Monetary policy

  5. What metric measures the total market value of goods and services produced domestically?

    • Net National Product
    • Gross National Income
    • Gross Domestic Product
    • Purchasing Power Parity

  6. What financial contribution is provided by the government to reduce a business's unit costs?

    • Import quota
    • Direct tax
    • Subsidy
    • Tariff

  7. What usually happens to a currency's exchange rate when domestic interest rates increase?

    • Currency appreciates
    • Rate remains fixed
    • Currency devalues
    • Currency depreciates

  8. Which phase of the business cycle is defined by falling GDP and rising unemployment?

    • Recession
    • Trough
    • Boom
    • Recovery

  9. A UK business exports goods to America. Which exchange rate movement benefits this UK firm?

    • Appreciated pound
    • Fixed pound
    • Weakened pound
    • Strengthened pound

  10. If the central bank raises interest rates, what immediate impact occurs on variable business borrowing?

    • Borrowing costs rise
    • Borrowing costs freeze
    • Borrowing costs fall
    • Tax liabilities fall

  11. A luxury car manufacturer experiences falling sales during a recession. How is this product classified?

    • Inferior good
    • Income inelastic
    • Complementary good
    • Income elastic

  12. A budget supermarket sees sales increase during an economic downturn. What type of good is sold?

    • Complementary good
    • Inferior good
    • Luxury good
    • Normal good

  13. The government reduces corporation tax rates to encourage business investment. What policy type is this?

    • Monetary policy
    • Supply-side policy
    • Contractionary policy
    • Import tariff

  14. A firm receives a government grant to install renewable energy equipment. How does this help?

    • Lowers investment costs
    • Increases tax liability
    • Increases unit costs
    • Reduces business liquidity

  15. During which phase of the business cycle should a business expand production to meet peak demand?

    • Trough phase
    • Recession phase
    • Slump phase
    • Boom phase

  16. An increase in employer National Insurance contributions directly raises staffing costs. What policy is this?

    • Trade policy
    • Fiscal policy
    • Monetary policy
    • Supply-side policy

  17. Which condition attracts short-term speculative capital inflows, known as hot money, into a nation?

    • Low interest rates
    • Falling exchange rates
    • High inflation rates
    • High interest rates

  18. What primary operational threat do businesses face during periods of rapid cost-push inflation?

    • Falling wage demands
    • Declining raw costs
    • Lower nominal sales
    • Rising production costs

  19. How do supply-side policies seek to foster economic growth without driving up price levels?

    • Expanding productive capacity
    • Restricting product output
    • Raising consumer taxes
    • Cutting business spending

  20. Why are manufacturers of capital equipment more severely affected by economic downturns than grocery stores?

    • Highly inelastic demand
    • Perishable product output
    • Highly cyclical demand
    • Heavy government subsidies

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