AAT L3 Business Awareness 2

Question 1

When the Bank of England increases the base interest rate, what is the MOST likely direct impact on businesses with variable-rate loans?

Accepted Answer

Their interest repayments will increase

Answer

Their interest repayments will decrease

Answer

Their loan principal will be automatically reduced

Answer

Their credit rating will improve immediately

Question 2

UK inflation rising above the Bank of England's 2% target is MOST likely to result in which monetary policy response?

Accepted Answer

The Bank of England increasing the base interest rate

Answer

The Bank of England reducing the base interest rate

Answer

The government increasing corporation tax immediately

Answer

The government cutting public spending within weeks

Question 3

If the pound sterling appreciates significantly against the euro, what is the MOST likely effect on a UK business exporting goods to Europe?

Accepted Answer

Its goods become more expensive for European buyers, potentially reducing sales

Answer

Its goods become cheaper for European buyers, boosting export sales

Answer

Its import costs from European suppliers will automatically increase

Answer

Its domestic UK sales will decrease as a direct consequence

Question 4

Which macroeconomic indicator measures the total monetary value of all goods and services produced within the UK during a specific time period?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Retail Price Index (RPI)

Answer

Consumer Price Index (CPI)

Answer

Balance of Payments

Question 5

Which source of business finance involves selling outstanding trade receivables (invoices) to a third party at a discount in exchange for immediate cash?

Accepted Answer

Invoice factoring

Answer

Hire purchase

Answer

Overdraft facility

Answer

Rights issue

Question 6

Retained profit as an internal source of finance has which MAIN advantage over a bank loan?

Accepted Answer

It requires no interest payments and does not create any debt obligation

Answer

It boosts the business's credit rating with external lenders

Answer

It is available to all businesses regardless of their profitability

Answer

It consistently provides larger amounts of funding than external sources

Question 7

The National Living Wage in the UK is BEST described as:

Accepted Answer

The minimum hourly rate that all workers aged 21 and over must be paid by law

Answer

A voluntary rate paid only by employers accredited by the Living Wage Foundation

Answer

The minimum wage applicable solely to apprentices in their first year of training

Answer

A rate set individually by employers based on their annual financial performance