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Economics multiple choice questions

GCSE and O level

Motives for Spending, Saving and Borrowing

Multiple Choice Questions and Answers

MCQ Questions:

1. A person is most likely to save more when there is an increase in:
A) exchange rate
B) inflation rate
C) interest rates
D) money supply

2. Which motive is most likely to increase the wish to open a savings account?
A) to have cash immediately available
B) to prepare for future expenditure
C) to satisfy essential needs
D) to widen present consumption choices

3. What might encourage a consumer to save rather than to spend?
A) being made unemployed
B) discounts on products
C) government subsidies to produce
D) high interest rates

4. Why may a rise in the rate of interest cause some people to save less?
A) They may be saving for a fixed 10-year term.
B) They may be saving out of habit.
C) They may be saving to leave as much money as possible to their children.
D) They may be saving to raise a particular sum of money.

5. What is the most likely result of an increase in interest rates?
A) a rise in investment
B) a rise in borrowing
C) a fall in consumer spending
D) a fall in productivity

6. What will cause the level of savings in an economy to rise?
A) a fall in investment
B) a fall in real wages
C) a rise in income tax
D) a rise in interest rates

7. What is the most important factor that affects how much a family saves?
A) the income of the family
B) the level of taxation
C) the rate of inflation
D) the reliability of banks

8. What would most likely cause a person to increase their savings?
A) a decision to plan for retirement
B) a fall in income
C) a fall in interest rates
D) a reduction in tax-free saving schemes

9. Nazmin Uddin works in a local office as a secretary three days a week. She lives with her parents in a small apartment. Meer Ali owns a successful fitness center that employs about twenty people. He owns a large house. Which is most likely to be correct?
A) Nazmin spends a smaller proportion of her income than Meer.
B) Nazmin saves most of her income.
C) Nazmin would find it easier than Meer to borrow money.
D) Nazmin has a lower disposable income than Meer.

10. What is likely to decrease the level of saving in an economy?
A) An increase in general income
B) An increase in the number of cheap offers in shops
C) A redistribution from poor to rich households
D) A rise in the rate of interest

MCQ Answers:

1. Answer: C (interest rates)
2. Answer: B (to prepare for future expenditure)
3. Answer: D (high interest rates)
4. Answer: D (They may be saving to raise a particular sum of money)
5. Answer: C (a fall in consumer spending)
6. Answer: D (a rise in interest rates)
7. Answer: A (the income of the family)
8. Answer: A (a decision to plan for retirement)
9. Answer: D (Nazmin has a lower disposable income than Meer)
10. Answer: B (An increase in the number of cheap offers in shops)

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