Business Management 2004PC WASSCE-Past Questions and Answers-WAEC

WAEC
Business Management 2004PC WASSCE

WASSCE Past Questions and Answers for Business Management 2004PC is a learning resource. Truly, we have designed this e-learning material to help students pass business management courses or exams.

Notably, this is irrespective of the relevant certificate accreditation board or authority or examining body.

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Table of Content

 

General Overview

WASSCE 2004PC business management question by Educareguide is the preferred management ebook for many students. It has assists students to gain admission to business management University of their choice.

Indeed, if there is any business management classes you should attend to gain a business and management degree, then this website is your preferred choice.

Though business management past questions and answers pdf will soon be available for download.

Nevertheless, this business management studies material is very important in your ambition to pass any business management schools exam, including the WAEC BM paper.

Certainly, excelling in business management programs will be much easier when studying for your degree in business. 

Furthermore, business management colleges that award business management  certificates are always delightful to admit students who study business management subjects lists.

Truly, our site helps you with strategies on how to pass your business management examination. Secondly, we have materials on business management major topics, sub-topics, etc.

Therefore, our site is very helpful to Senior High School – SHS Students across the West African sub-region and the globe.

Notably, some of these countries are Nigeria, Ghana, Sierra Leone, The Gambia and Liberia. 

Also, students in Europe use our business management study manual for exam success.

Specifically for this paper, check the questions and the answers just below.

 

The Nature of the Examination – Business Management 2004PC WASSCE

There are two Papers in the examination, (and these are Paper 1 and Paper 2).Paper 1 is an Objective Test and Paper 2 is a written theory paper.

There are 50 questions in the Paper 1. Finally, there are 10 questions in the Paper 2. The 10 questions is made up of 1 Case Study and 9 other questions.

They are asked to tests the student’s general understanding of the various topics under business management. 

I must emphasize that, in order to pass your WASSCE questions with good answers, you need to practice critical thinking. This is because, some of the questions are tricky.

 

The Summary of the Paper – Business Management 2004PC WASSCE

The WASSCE Business management Paper for 2004 can summarized below:

  • 2004PC WASSCE Business Management Paper One
  • 2004PC WASSCE Business Management Paper Two

 

Business Management 2004PC WASSCE-Past Questions and Answers Paper 1

 

Let me show you how to find the answers to the Business Management Questions – Paper 1. To clarify that, when you read a question, just click on this symbol (˅) that follows the question.

After doing so, the answer will drop down for you. In fact, it is a very simple task.

However, for the purposes of evaluating yourself, you may want to answer the before reviewing the suggested answer (or solution)

 

  1. Shareholders are the owners of a   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Company
    2. sole proprietorship
    3. co-operative society
    4. limited liability partnership

 

  1. Which of the following may not be found in a partnership deed?   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. The objectives of the firm
    2. How disputes may be settled
    3. How profits and losses will be shared
    4. The separation of ownership from management

 

  1. A firm which assists the society in which it operates is performing its   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. administrative duty
    2. social responsibility
    3. moral responsibility
    4. organizational duty

 

  1. Which of the following functions ensures that the standards set for an organization are met?   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Co-ordination
    2. Planning
    3. Controlling
    4. Organizing

 

  1. Which of the following is not a primary activity of management?   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Planning
    2. Rewarding
    3. Organizing
    4. Directing

 

  1. Which of the following types of communication is least likely to be misinterpreted?   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Oral
    2. Written
    3. Non-verbal
    4. Body language

 

  1. Decisions which are routine in nature are known as   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. programmed decisions
    2. strategic decisions
    3. tactical decisions
    4. organizational decisions

 

  1. The first step to take in decision-making is to   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. gather information
    2. evaluate possible alternatives
    3. identify and define the problem
    4. implement the most appropriate solution

 

  1. To induce employees to contribute towards the attainment or organizational goals, they must be   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. motivated
    2. directed
    3. disciplined
    4. controlled

 

  1. Which of the following is shown on an organization chart?   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Date of promotion
    2. Names of managers
    3. Modes of communication
    4. Span of control

 

  1. Which of the following is not a characteristics of an authoritarian leader?   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. He gives subordinates little scope to influence decisions
    2. He imposes decisions on subordinates
    3. He entertains suggestions from subordinates
    4. He supervises subordinates closely

 

  1. The situation in which authority is concentrated in a few people in management is known as   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. segmentation
    2. concentration
    3. decentralization
    4. centralization

 

  1. The transmission of information from a superior to a subordinate in an organization is known as   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. downward communication
    2. horizontal communication
    3. vertical communication
    4. formal communication

 

  1. All of the following are objectives of communication except   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. punishing offenders
    2. controlling performance
    3. disseminating goals for the organization
    4. development plans for the achievement of goals

 

  1. A list of the main tasks that a job holder has to carry out is known as job   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. analysis
    2. evaluation
    3. specification
    4. description

 

  1. Which of the following is the first step in the staffing process?   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Selection
    2. Recruitment
    3. Job analysis
    4. Human resource planning

 

  1. The division of a market into distinct groups of buyers with special needs and characteristics is called   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. market survey
    2. market targeting
    3. market segmentation
    4. market share

 

  1. The informal channel of communication that spreads truths, half-truths and untruths is called   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. decoder
    2. noise
    3. grapevine
    4. Medium

 

  1. All of the following are basic elements in the decision-making process except   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. choice
    2. alternatives
    3. Certainty
    4. Consequences

 

  1. An agent has no contractual capacity, this lies with the principal. This means that an agent   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. is permitted to make secret profits
    2. should serve his principal honestly
    3. can delegate his duties without the consent of the principal
    4. only serves as a middleman between the principal and third parties

 

  1. Which of the following is not an element of a valid contract?   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Legality
    2. Remedies
    3. Formality
    4. Agreement

 

  1. The reliance on an untrue statement to enter into a contract is referred to as   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. agreement
    2. performance
    3. misrepresentation
    4. breach of contract

 

  1. The protection of infant industries is aimed at   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. creating employment avenues at home
    2. encourages the production of inferior goods
    3. ensuring that consumers buy high prices
    4. reducing the extent of international specialization

 

  1. When material facts are not disclosed in an insurance transaction, the insurer has the option of   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. claiming damage from the insured
    2. declaring the contract void
    3. paying the insured a token compensation
    4. deciding to convert his policy at will.

 

  1. Trading between two countries is known as   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. retail trade
    2. wholesale trade
    3. international trade
    4. bulk trade

 

  1. Which of the following is a source of government revenue?   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Overdrafts
    2. Aids and grants
    3. Hire-purchase
    4. Credit sales

 

  1. Which of the following is an advantage of recruiting staff within an organization?   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. New insight and perspectives can be brought into the organization
    2. Management has little knowledge of the abilities of the candidate
    3. Candidates have a better knowledge of the company
    4. Moral and motivation are diminished

 

  1. Which of the following does not belong to the concept of marketing?   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Price
    2. Product
    3. Place
    4. People

 

  1. Goods are moved from producers to final consumers through   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. channels of distribution
    2. promotional activities
    3. ancillary services
    4. appropriate pricing

 

  1. Which of the following is not an objective of advertising?   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. To assist in selling
    2. To boost the morale of buyers
    3. To provide information about the product
    4. To build an image for the product

 

  1. All of the following will cause a cheque to be dishonoured except when   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. words and figures on the cheque differ
    2. the cheque is not dated
    3. the drawer’s account has been closed
    4. the cheque is issued two days before presentation

 

  1. In Ghana, a company has to be registered with the   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Customs Excise and Preventive Service
    2. Trades Union Congress
    3. Labour Department
    4. Registrar of Companies

 

  1. Which of the following is not a function of a computer?   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Generating data
    2. Receiving data
    3. Storing data
    4. Retrieving data

 

  1. The method of training in which employees are taught how to perform a task byasking them to perform the very task under close supervision is   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. induction training
    2. on-the-job training
    3. supervisory training
    4. apprenticeship training

 

  1. Which of the following will be at the’ top in a hierarchical arrangement of staff in a firm?   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Training Manager
    2. Foreman
    3. Chief Executive Officer
    4. Production Superintendent

 

  1. Which of the following is involved in strategic decision-making in a firm?   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Supervisors
    2. Customers
    3. Middle Management
    4. Top Management

 

  1. Ensuring that an employee in the production department is placed on the right salary scale is the duty of the   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Finance Officer
    2. Controller and Accountant General
    3. Shareholders
    4. Personnel Manager

 

  1. The interpersonal process by which a supervisor tries to influence employees to act in a given way is termed   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. planning
    2. leading
    3. organizing
    4. Communicating

 

  1. The extent of decentralization in a firm is reflected by the   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. number of departments in the firm
    2. number of employees in the firm
    3. type of decisions made at lower levels of management
    4. leadership style adopted by the management

 

  1. The transmission of information among people at the same level in a firm is   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. horizontal communication
    2. vertical communication
    3. upward communication
    4. diagonal communication

 

  1. An agreement between two parties to perform a specific task that is legally biding is known as   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. contract
    2. an agency
    3. an invitation to treat
    4. a domestic agreement

 

  1. When an offeree changes the term of a contract he is making   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. an acceptance
    2. a counter offer
    3. an invitation to treat
    4. a public offer

 

  1. An agent who conducts the bulk of the principal’s business on a daily basis is a   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. factor
    2. special agent
    3. general agent
    4. del credere agent

 

  1. The person who orders that money should be paid under a bill of exchange is the   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. payee
    2. Drawee
    3. acceptor
    4. drawer

 

  1. The abbreviation I/F written on a cheque by a banker means   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. internal funding
    2. insufficient funds
    3. informal funding
    4. international funding

 

  1. A sole trader can use all the following sources of funds except   [expand title=””]  B   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. overdrafts
    2. trade credits
    3. leases
    4. debentures

 

  1. The commonest type of business organization in Ghana is the   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. sole proprietorship
    2. partnership
    3. co-operative society
    4. public corporation

 

  1. Which of the following is the first item to consider in the marketing mix? The   [expand title=””]  C   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. promotion
    2. price
    3. product
    4. market

 

  1. When an employee is moved to a lower rank in a firm, he is said to be   [expand title=””]  A   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. demoted
    2. dismissed
    3. retrenched
    4. reprimanded

 

  1. Which of the following is not a source of recruiting staff?   [expand title=””]  D   is the answer -Business Management 2004PC WASSCE   [/expand]
    1. Trade journals
    2. Schools and colleges
    3. Notices and posters
    4. staff durbars

 

I’m sure you are going to evaluate your performance with regards to the objective questions above.

Let me emphasize again that the answers to the objective questions can be found by clicking on the symbol (˅) just after the question.

Now let’s proceed to the Paper 2:

 

Business Management 2004PC WASSCE-Past Questions and Answers- Paper 2

 

This paper a case study and nine other theory questions. Please read the case carefully before attempting the questions.

As I have always, said, this Business Management questions and answers needs critical reading and understanding of the questions, most especially, the case.

As I have always said, it is better to first answer the questions on your own before referring to the answer from the drop-down symbol.

Let me show you how to find the answers to the Business Management Questions – Paper 1, Section B.

When you read a question, just click on this symbol (˅) beside it, and the answer will drop down for you. It is a very simple task.

 

CASE STUDY

Read the following case carefully and answer the questions which follow.   [expand title=””]

BEST COMPANIONS COMPANY LTD

Mr. Jones Odani joined hands with two other colleagues Fuseini Adamu and Bukari Okoni and formed a company named BEST COMPANIONS COMPANY LTD. The objective was to produce on a large-scale and sell good quality rice in the sub-region.

The company immediately commenced business after receiving the registration certificate. In a matter of a month, the company hired a huge storage facility for the storage of the product when harvested.

Staff of various categories, including sales personnel, were employed and a few machines were acquired for use on the farm. Unfortunately, things did not move the way management expected. The rains failed resulting in a considerably poor yield as the seeds were not high yielding and drought resistant. The company also faced stiff competition from rival companies many of which had existed for decades. The company was in real crisis and creditors called for its immediate liquidation.

Management, on sensing danger, immediately summoned a meeting of all employees to arrest the appalling situation and to come out with a new working document to facilitate trade so as to ensure that the company did not run at a loss, but at least break even.  [/expand]

 

1.   (a) Why were the creditors calling for the immediate liquidation of the company?

Suggested Answer:   [expand title=””]

The creditors were calling for the immediate liquidation of the company so that they could be paid out of the proceeds from the sale of the company’s properties.  [/expand]

1.   (b) State four reasons that accounted for the company’s huge debts.

Suggested Answer:   [expand title=””]

  • The hiring of a huge storage facility for the storage of the product when harvested.
  • Poor yields resulting from poor seeds or low yielding seeds.
  • Inadequate rains.
  • Inability to meet or withstand competition from rival companies.  [/expand]

1.   (c) State three factors that led to the low yield of rice on the farm.

Suggested Answer:   [expand title=””]

  1. They used poor seeds or low yielding seeds.
  2. The seeds not being drought resistant.
  3. Inadequate / poor rains.  [/expand]

1.   (d) What formality for the setting up of a limited liability company did BEST COMPANIONS CO. LTD. violate?

Suggested Answer:   [expand title=””]

The company was not issued with the Certificate to Commence Business.  [/expand]

1.  (e) Suggest five ways by which the company’s present predicament could have been avoided.

Suggested Answer:   [expand title=””]

  • Employment of sales personnel should have been postponed until after harvest or yields are known.
  • Proper research into the rice industry should have been carried out by qualified Agricultural personnel before operating.
  • Hiring of the storage facility should have been postponed/delayed.
  • Drought resistant seeds should have been used.
  • A good marketing strategy should be adopted to withstand competition.  [/expand]

1.   (f) What type of pricing policy should the company adopt to salvage the situation?

Suggested Answer:   [expand title=””]

The company should use penetration pricing policy, that is, selling their rice at a low price relative to that of their competitors.  [/expand]

1.   (g). What is meant by the term break even as used in the passage?

Suggested Answer:   [expand title=””]

Break-even is a situation where a company neither makes losses nor profit. This means that cost of production = sales.  [/expand]

 

2.    (a) Explain three advantages of large-scale business enterprises.

Suggested Answer:   [expand title=””]

  • A large-scale business enterprise can employ higher qualified managers.  As a result, these managers may be allowed to specialize in the various branches of management. Furthermore, expert administrators can therefore be put in charge of marketing, production, transport and personnel.
  • Secondly, banks and other financial institutions are often willing to lend capital to large firms at more favourable terms.
  • Thirdly, large firms have the financial capacity to buy in larger quantities than small firms. As a matter of fact, when goods are bought in large quantities, special discounts are offered to the buyer.
  • Lastly, large firms are much better equipped to meet the risks of trading than small firms.  Thus, they can produce more than one product, so that a fall in demand for one of them may be offset by a rise in demand for one of the other products.  [/expand]

2.   (b) Explain three factors that account for the small size of businesses.

Suggested Answer:   [expand title=””]

  • Small size of the market:- West Africa markets are very small in size. This is because most people have low income and thus demand less goods.
  • The desire to be independent:- Most people will not want to work under anybody but will like to be their own boss. The only way to achieve this is to set up their own firms so as to enable them to take decisions themselves and implement them immediately.
  • Large businesses require large management skills to operate and this has discouraged many businessmen and they prefer to set businesses they can effeCtively and efficiently manage.
  • Lack of capital .to establish large firms:- The difficulty involved in accessing credit/loans from the financial institutions due to lack of collateral securities.  [/expand]

 

3   (a) What is a contract?

Suggested Answer:   [expand title=””]

A contract may be defined as an agreement which will be enforced by the law courts. A contract is therefore a legally enforceable agreement, and must be made either by deed or for a valuable consideration.  [/expand]

3   (b) State and explain four elements that should be present before a contract can be enforceable by law.

Suggested Answer:   [expand title=””]

  • There must be agreement between the contracting parties:- One party must make an offer to the other indicating his willingness to be bound by the contract and the other must also indicate acceptance without any conditions being stipulated.
  • Intention to create legal relations: – The agreement must be intended to be subject to an action in a court of law. That is the parties to the contract must intend that, where one party fails to perform his promise under the contract, the other can sue him for damages or be compelled in the law court to perform it.
  • Consideration: – Each party to the contract must give valuable consideration. This means that each party must give up something or make a promise in return for a benefit received or the other party’s promise.
  • Legality: – All contracts must be made legally. The contract must not be for an illegal purpose or contain terms, which are considered to be contrary to public policy.
  • Formality: – Formality is one of the elements of a valid contract and it refers to the form in which the law requires the contract to take. All speciality contracts must be made formally. They must be yritten, signed, sealed and delivered.
  • Capacity: – Both parties must have contractual capacity. Each party to a contract beof age that is 18 years and above, soundness o of mind and other requirements for entering into the contract. The law therefore prohibits children, the insane, drunken persons from entering into a valid contract.  [/expand]

 

4.   (a) Explain the basic idea of Insurance.

Suggested Answer:   [expand title=””]

Insurance is based on the principle of the fortunate helping the unfortunate. It is defined as the “pooling of risks”. Individuals and organizations contribute to the “pool’ so that in the event of a loss, the unfortunate one could be compensated.  [/expand]

4.   (b) Explain the following terms in Insurance:

  • Insurable Interest
  • Utmost Good Faith
  • Proximate Cause
  • Premium [/expand]

Suggested Answer:   [expand title=””]

  • Insurable interest:- The basis of this principle is that the one insuring (owner) must suffer a loss or damage on the happening of the event stipulated in the contract. To have an insurable interest, one must be in danger of suffering some loss or incurring some liability should the thing concerned be destroyed or damaged in anyway. Therefore one can insure his own life and property but not that of his friend. This principle therefore prevents policyholders fromprofiting out of the insurance company.
  • Utmost good faith (Uberrima Fide):- This is a principle which requires both the insured and the insurer in an insurance contract to make full disclosure of all material facts. The insured must answer all questions put to him by the insurer in truthfulness without hiding any material fact and the insurer too must explain to the insured the terms of the insurance concerning the exact cover. Failure on both parties to do this will render the contract null and void.
  • Proximate Cause:- This principle says that if we insure against a certain eventuality (risk), we are entitled to compensation only if that eventuality is the immediate cause of the loss. Anything excluded from the contract which turns out to be the proximate cause of an unfortunate event would not make the insurance company liable. In simple terms, proximate cause is a situation where an insured cannot claim compensation if a property which he has insured against fire has been stolen.
  • Premium:- Premium is a periodic payment from an insured to the insurer for the protection of an insured’s property by the insurer. It is therefore the amount or sum that is paid to the insurance company in order to be insured.
  • Subrogation:- The word “subrogate” means “to step into the place of”. Under this principle, after the insurance company has paid compensation on a property, it has the right to takeover the property concerned, so that the insured does not make a gain through the process.  [/expand]

 

5.   (a) What is a computer?

Suggested Answer:   [expand title=””]

A computer is an electronic device which follows a set of instructions to process data into information. It therefore uses a list of instructions called programme to perform calculations or to store, manipulate and retrieve information.  [/expand]

5.   (b) Briefly explain the following terms:

  • Software
  • Monitor Visual Display Unit
  • Menu Bar
  • Keyboard
  • Cell

Suggested Answer:   [expand title=””]

  • Software:- Software refers to programs that are designed to perform specific tasks or functions in the computer. It is the intangible part of the computer and contains commands, procedures, instructions and programs that direct the computer hardware to perform specific task or function.

  • Monitor / Visual Display Unit:-The monitor or visual display unit is just like a television screen which allows the operator of the computer to see what is going on.

  • Menu Bar:-The menu bar displays commands which are used to perform specific tasks on the computer.

  • Keyboard:-It is an input device and has keys just like the typewriter. It is used to type information and enter instructions into the computer. It is the main communication link between the operator and the computer.

  • Cell:-It is a square on a spreadsheet application screen, indicating where to enter I data.  [/expand]

 

6.   (a) State two causes of inflation.

Suggested Answer:   [expand title=””]

  • Demand pull inflation:- It is a situation where aggregate demand exceed aggregate supply with the result that much money chases few goods.
  • Cost push inflation:- It is a situation where an increase in the cost of production causes prices of goods and services to rise continuously.  [/expand]

6.   (b) Explain five effects of inflation.

Suggested Answer:   [expand title=””]

  • Effects on income:- People who receive fixed incomes, e.g., wage and salary earners, pensioners, shareholders are affected because inflation reduces their real income because the value of their money is reduced. On the other hand, inflation favours businessmen and shareholders who receive unfixed dividends on their shares.
  • Effects on pattern of savings:- During inflation, money is not a good store of value. Prices of goods and services rise faster than interest rates on savings. Savings are discouraged whilst immediate purchases of goods/ property whose value rises during inflation are encouraged.
  • Effects on Borrowers and Lenders:- Borrowers gain because the real value of their debt falls/ decreases and lenders lose because their loaned money can now buy only fewer goods and services when they are paid back.
  • Effect on redistribution of income:- Inflation redistributes income from workers and farmers to entrepreneurs or businessmen. This means that workers and farmers become poorer whereas businessmen become richer.
  • Effects on foreign trade:- If prices of home produced goods rise relative to the prices of imported goods, then inflation will encourage imports and this can cause severe balance of payments problems.  [/expand]

 

7.   (a) Explain three benefits of International Trade.

Suggested Answer:   [expand title=””]

  • It Widens/Expands the Market:- International trade widens the extent of a country’s market. Countries will no more be limited to their domestic markets. They have many foreign markets to sell their goods when they engage in international trade. For example, because of international trade, Ghana is able to sell goods in United Kingdom, France, Germany, Belgium and others.
  • Countries Enjoy Variety of Goods:- International trade enables countries to enjoy different kinds of goods including those they cannot produce themselves.
  • Foreign Exchange Earnings:- International trade is seen as a source of foreign exchange and hence enables countries to earn enough foreign exchange needed to finance projects meant to speed up the rate of economic growth and development. For example, because of international trade, Ghana is able to earn $1,270m in 1994 from extorts
  • Reduces Unemployment Problems:- International trade helps in reducing
    unemployment problems or opens up employment avenues both directly and indirectly. Since international trade leads to efficient allocation of resources and optimal utilization of scarce resources, resources, which might have been lying idle, would be employed. Labour from one country can be employed in another country.
  • Sources of Government Revenue:- International trade enables countries to raise
    enough revenue needed to finance development projects. This revenue can be realized through the imposition of export and import duties. For example, in 1995 taxes from international trade accounted for 28% of total government revenue.
  • Specialization:- International trade makes international specialization possible
    and hence leading to increase production at a reduced cost. This will enable producers to sell their goods at a reduced price in order to ensure constant demand.  [/expand]

 

7.   (b) State and explain four reasons why some countries restrict trade with other countries.

Suggested Answer:   [expand title=””]

In spite of the advantages associated with international trade, different governments impose restrictions like quota, custom duties, excise duties, prohibition, etc. on trade for the following reasons:

  • To protect infant industries:- industries which have just been established are
    considered not to have grown and gained grounds strong enough to compete with the developed ones. If allowed to compete with these developed ones, the old ones will out compete the new (infant) industries. Trade restrictions are therefore adopted to protect the infant industries.
  • To create employment avenues:- Trade restrictions may also be a source of
    employment for people. The revenue that arise from the restriction may be used for development which will create job opportunities for people. Also, custom officials may be employed to implement these restrictions.
  • As a source of revenue to the government:- The government of countries restrict
    free trade to raise revenue for developmental purposes. Import duties contribute greatly to the revenue generated in every West African country.
  • As a retaliatory measure:- Such a policy could also be taken for retaliatory
    measures if a trading country imposes restrictions on the partner, that partner can also put in measures to counter those restrictions.  [/expand]

 

8.   (a) Who is an Agent?

Suggested Answer:   [expand title=””]

An agent is a person who is employed for the purpose of bringing his principal into contractual relations with third parties. He only serves as a middleman between the principal and third parties.  [/expand]

8.   (b) Explain five duties of an Agent.

Suggested Answer:   [expand title=””]

  • Non-delegation: – The agent must perform the work or duties personally. He has no right to delegate his duties to a sub-agent without the authority of his principal.
  • Secret profits: – The agent must not make any secret profit out of the performance of his duties as an agent or beyond the commission or the remuneration paid by his principal.
  • Duty to account: – The agent must pay to his principal all monies received. He is required to keep proper accounts and to produce them on demand.
  • Conflict of interest:- The agent must not allow his own interest to conflict with his obligations to his principal.
  • Due Diligence: – Generally the agent must exercise due diligence in the performance of his duties and to apply any special skill which he professes to have.  [/expand]

 

9.   (a) Explain four reasons for a manager’s unwillingness to delegate.

Suggested Answer:   [expand title=””]

  • Lack of confidence and trust in the abilities of his subordinates. That is, if the manager has doubt about the skills of his subordinates in meeting his demands of the delegated tasks, he is likely not to delegate.
  • Lack of proper control and communication systems in the organization. If it will be difficult for the manager to monitor the performance of his subordinates and get feedback on the results for corrective actions, he is likely not to delegate.
  • It may be due to a feeling of being bossy. This may be due to superiority complex or the feeling that he knows everything and can do everything better than everybody, or an unwillingness to admit that subordinates could perform some of the superiors duties.
  • It may be due to the burden of being held responsible and accountable for the mistakes of his subordinates.
  • Lack of understanding of what delegation involves. That is lack of conviction on the part of the manager. Some managers have no faith in delegation as a means of increasing administrative efficiency, such managers will not delegate.  [/expand]

9.   (b) Explain three advantages of delegation.

Suggested Answer:   [expand title=””]

  • It saves superiors time. They are relieved of performing minor jobs and therefore they have enough time to concentrate on more strategic issues affecting their companies.
  • It helps to make use of special skills and talents hidden in the subordinates. This is achieved by engaging them in challenging jobs in order to unearth their talents.
  • It helps to motivate the subordinates because they are engaged in more challenging jobs which helps to involve them in the decision-making process.
  • It serves as a training ground for the subordinates. They are introduced to more challenging jobs which helps to widen their skills, knowledge and develops better attitudes in them for better performance.  [/expand]

 

10.   (a) Explain the following:

  • Bill of Exchange
  • Cheque

Suggested Answer:   [expand title=””]

  • Bill of Exchange:- Simply defined a bill of exchange is a signed -Iritten order by which one party (drawer) instructs another party (drawee) to pay a specified sum toa third party. According to the Bill of Exchange Act (300), it is defined as “an unconditional order in writing addressed by one person to another, signed by the person paying it requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or the order of a specific person or to bearer.
  • Cheque:-A cheque is a bill of exchange drawn on a banker payable on demand.   [/expand]

10.   (b) State three characteristics of a negotiable instrument.

Suggested Answer:   [expand title=””]

  • The title to it passes by delivery or by delivery and endorsement.
  • Holders of negotiable instruments can sue in their own names.
  • Holders of negotiable instruments do not have to give notice of transfer.
  • Holders are free from defects on them.  [/expand]

10.   (c) When is a bill of exchange said to be negotiable?

Suggested Answer:   [expand title=””]

Negotiation means the “transfer of a bill (or cheque) to another person so as to constitute the transferee the holder of the bill”, or it is negotiated where it is transferred from one person to another in such a manner as to constitute the transfer to the holder of the bill. In other words, the holder of a bill transfers his title in a bill to another in order to make the transferee the valid owner through the process of negotiation.  [/expand]

 

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