Correct Answer: B. excess supply

Correct Answer: A. an expansionary monetary policy

Explanation

a)(i) Open market: This involves the sales of securities e.g Treasury bills through the commercial banks. If the Central Bank wants to increase money supply, it will purchase securities from the public through the commercial banks. This way. the reserves of the commercial banks will increase. Thereby increasing their ability to grant more credit and vice versa.

(ii) Bank rate: This is the rate at which the Central Bank lends to the commercial banks and discounts bills of exchange so as to influence the money supply. To increase money supply. the Central Bank will reduce the bank rate. This will in turn lower the lending rates of commercial banks. causing the public to demand for more loans and vice versa. It controls research on the economy. It is the lender of last resort.

(b) (i) It acts as agent. banker and adviser to the government.

(ii) It controls the money supply / maintains price stability / determines monetary policy.

(iii) lt issues currency.

(iv) It is a banker to the other financial institutions

(v) lt operates a clearing house system

(vi) lt manages the public national debt.

(vii) It controls foreign currency.

(vii) It controls research on the economy.

(ix) It is the lender of last resort.

Explanation

A huge national debt can affect the economy of a country in the following ways:

(i) The servicing of an external debt will involve an outflow of resources which can otherwise be used for economic development.

(ii) It can reduce the availability of foreign exchange in the form of depleted foreign reserves.

(iii) The servicing of a large internal debt will limit government's ability to provide social capital and services for the people.

(iv) A large domestic debt will influence the distribution of income in the country.

(v) If a large internal debt is sustained by a high rate of interest, it will reduce private investment on capital goods.

(vi) A large external debt can make a country to be susceptible to the whims and caprices of external creditors.

Correct Answer: C. may be limited to chemical industries

Explanation

The transportation industry is the highest demand for petrol while the chemical industry a close second

Explanation

(a) A joint venture is a form of business that is jointly owned by two or more independent firms that continue in their original business but pool their resources in another line of business.

(b) i. A private company can raise capital more easily than a partnership. It can Issue debentures or borrow more easily from banks.

ii. The shareholders enjoy limited liability since they cannot lose more than the capital invested while in a partnership, there is an unlimited liability since partners' assets can be sold to offset business debts.

iii. The business is a separate legal entity, the owners are different from the business in law while in a partnership the business is not a separate entity.

iv. The business has a greater perpetual existence while a partnership can easily be dissolved.

v. The business enjoys internal economies of scale because it operates on a larger scale than a partnership.

(c) i. Public enterprises receive grants and subsidies from the government.

ii. They can raise funds from the capital market by issuing bonds.

iii. Business assets can be sold to raise funds

iv. Rents paid on properties owned by an enterprise can also serve as a source of capital

v. Revenue from services rendered to the public can also serve as a source of capital.

vi. They can also buy goods on credit and make payments later.

vii. Assets can easily be obtained from hire purchase companies

viii. Public enterprises can plough back profits.

ix They can raise loans from financial institutions

Correct Answer: D. average variable cost

Correct Answer: C. 230 units

Correct Answer: B. legal barriers to entry

Correct Answer: B. an ogive

Explanation

A cumulative frequency is known as an ogive. It is a type of frequency polygon that shows cumulative frequencies.