Matching Definitions

(1) Which situation is the best example of “Commuting Expenses” incurred by an employee?

• (a) Michael purchases a new briefcase for his work documents.
• (b) Anna buys a monthly train ticket to travel to and from her workplace.
• (c) Lucas pays for his lunch at the cafeteria near his office building.
• (d) Sophie buys a new suit for her job interviews.

Answer

Correct Answer: (b) Anna buys a monthly train ticket to travel to and from her workplace.
Commuting expenses are those costs that are incurred by an employee specifically for traveling to and from their place of work. In this scenario, Anna’s purchase of a monthly train ticket is directly related to her daily travel to work, thus it represents a commuting expense.

(2) Which of these is an example of “Outsourcing” in a business context?

• (a) A company contracts a third-party firm to handle its customer service operations.
• (b) The marketing department hires a new team lead from within the company.
• (c) The IT department purchases new software for internal use.
• (d) Management decides to open a new branch office in another city.

Answer

Correct Answer: (a) A company contracts a third-party firm to handle its customer service operations.
Outsourcing is a practice used by companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. In this case, contracting a third-party firm for customer service is a clear example of outsourcing.

(3) “Inflation” is best exemplified by which of the following scenarios?

• (a) A stock market dip results in a temporary decrease in the value of stocks.
• (b) The average price of groceries increases over a year, reducing the purchasing power of the currency.
• (c) A company’s profits decrease due to a rise in the cost of raw materials.
• (d) The government reduces taxes, leading to increased disposable income for citizens.

Answer

Correct Answer: (b) The average price of groceries increases over a year, reducing the purchasing power of the currency.
Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The scenario where the average price of groceries increases is a direct reflection of inflation.

(4) What does the term “Gross Domestic Product (GDP)” refer to?

• (a) The total value of goods and services produced within a country’s borders in a specific time period.
• (b) The profit earned by a company after taxes and expenses.
• (c) The total population of a country.
• (d) The number of exports a country makes in a year.

Answer

Correct Answer: (a) The total value of goods and services produced within a country’s borders in a specific time period.
Gross Domestic Product (GDP) is a measure of a country’s economic performance and represents the total value of all goods and services produced within its borders over a specific time period.

(5) What does “Supply and Demand” refer to in economics?

• (a) The balance between a company’s assets and liabilities.
• (b) The relationship between the quantity of a good or service available and the desire for it among buyers.
• (c) The government’s control over businesses.
• (d) The total revenue generated by a business.

Answer

Correct Answer: (b) The relationship between the quantity of a good or service available and the desire for it among buyers.
Supply and demand is an economic principle that describes the relationship between the availability of a product or service and the desire for it among consumers. It influences pricing and market behavior.