MULTIPLE CHOICE – C1 Vocabulary

1. What does the word subsidy mean in an economic context?

A) A government tax on goods
B) Financial support given by the government to an industry
C) A type of loan from a private bank
D) A payment to consumers
→B

2. If a company is said to be insolvent, it means:

A) It is expanding rapidly
B) It cannot pay its debts
C) It has increased its market share
D) It is reducing its workforce
→B

3. The word fiscal relates to:

A) Climate policy
B) Government spending and taxation
C) Agriculture and food production
D) Environmental regulations
→B

4. To diversify an investment portfolio means to:

A) Sell all your assets
B) Focus on one type of stock
C) Spread investments across different sectors
D) Invest only in local businesses
→C

5. A windfall profit is:

A) A loss incurred during a recession
B) A steady, expected income
C) A sudden and unexpected gain
D) A tax refund
→C

6. What does the verb inflate mean in an economic sense?

A) To reduce prices
B) To print more banknotes
C) To cause prices or costs to rise
D) To decrease demand
→C

7. If a currency appreciates, it:

A) Becomes weaker compared to others
B) Is removed from the market
C) Increases in value against other currencies
D) Is exchanged less frequently
→C
8. What is outsourcing?
A) Reducing domestic staff
B) Purchasing raw materials
C) Hiring third parties to perform services or produce goods
D) Investing in local companies
→C

9. A boom in economic terms is:

A) A sudden drop in production
B) A period of rapid economic growth
C) A market crash
D) A decrease in consumer confidence
→B

10. What does it mean if a good is elastic in economic terms?

A) Its price never changes
B) It is made of flexible materials
C) Its demand changes significantly with price changes
D) Its supply is government-regulated
→C

11. A layoff refers to:

A) A company merger
B) Temporarily halting production
C) The dismissal of workers due to economic reasons
D) Cutting bonuses
→C

12. A tariff is best defined as:

A) A company’s total annual revenue
B) A restriction on domestic hiring
C) A tax on imported or exported goods
D) A type of investment product
→C

13. A bear market is one in which:

A) Prices are rising
B) Prices are falling
C) Investors are highly optimistic
D) Taxes are being cut
→B

14. To speculate in the stock market means to:

A) Analyze long-term trends
B) Buy stocks with high risk for potential high return
C) Invest only in bonds
D) Avoid market involvement
→B

15. Leverage in finance refers to:

A) A government loan program
B) The use of debt to increase potential returns
C) A type of market regulation
D) A form of taxation
→B

16. A bubble in economics refers to:

A) A balanced trade environment
B) An asset's price rising well above its real value
C) A period of deflation
D) Government-controlled inflation
→B

17. A hedge fund is:

A) A savings account for individuals
B) A fund that protects governments against default
C) A private investment fund using complex strategies for high returns
D) A government subsidy for agriculture
→C

18. The term benchmark often refers to:

A) An official market holiday
B) A standard for comparison in performance evaluation
C) A minor economic event
D) A legal financial limit
→B

19. Capital gains are profits made from:

A) Regular salary
B) Selling an asset for more than it was purchased
C) Receiving government subsidies
D) Taking out a business loan
→B

20. The word devaluation means:

A) Raising the value of currency to control imports
B) A planned decrease in a currency’s value by the government
C) A tax increase on exports
D) Cutting interest rates
→B

21. What does GDP per capita refer to?

A) The government’s total revenue
B) Total output divided by the number of people in a country
C) The percentage of imports
D) The amount spent on public services
→B

22. A trade surplus occurs when:

A) A country imports more than it exports
B) A country's currency weakens
C) Exports exceed imports
D) Consumer demand falls
→C

23. If an economy is overheated, it likely means:

A) It is experiencing deflation
B) It is growing too fast, leading to inflation
C) It is in a deep recession
D) Interest rates are falling
→B

24. The term default in finance refers to:

A) Reducing a loan’s interest
B) Reaching maximum credit
C) Failing to repay a loan
D) Settling a debt ahead of time
→C

25. An economy of scale refers to:

A) A tax on large companies
B) Higher costs with increased production
C) Cost advantages from increased output
D) Small business regulation
→C

26. A tariff barrier is used to:

A) Encourage exports
B) Limit government spending
C) Restrict imports through taxes
D) Lower interest rates
→C

27. What does it mean if a market is volatile?

A) It remains consistent over time
B) It is government-regulated
C) It fluctuates rapidly and unpredictably
D) It favors long-term investment
→C

28. A liability on a company’s balance sheet is:

A) An asset
B) A financial obligation or debt
C) A stock option
D) A profit margin
→B

29. What is a bull market?

A) A market where investors are pessimistic
B) A market characterized by falling prices
C) A market where prices are rising
D) A temporary market closure
→C
30. A blue-chip stock typically refers to:
A) A new, high-risk company
B) A stock in a well-established, financially sound company
C) A stock that fluctuates heavily
D) Government-issued bonds
→B

31. A benchmark interest rate is:

A) A fixed rate for low-income loans
B) The interest rate at which inflation is zero
C) A standard rate set by a central bank
D) The minimum rate for international loans
→C

32. A credit rating is used to:

A) Set employee salaries
B) Measure consumer spending
C) Evaluate a borrower’s financial reliability
D) Define monetary policy
→C

33. A write-off in accounting is:

A) Paying a debt in full
B) A loan granted to a corporation
C) A reduction in the value of an asset
D) Transferring debt to another company
→C

34. A hostile takeover occurs when:

A) Two firms agree to merge
B) A company is taken over against its management’s wishes
C) A company files for bankruptcy
D) There is a labor strike
→B

35. What is the meaning of yield in finance?

A) The dividend announced by the government
B) The total sales in a given period
C) The earnings generated from an investment
D) The cost of borrowing
→C

36. Liquidity crisis describes:

A) Excessive government reserves
B) A shortage of available cash or assets quickly convertible to cash
C) A rise in stock values
D) Overproduction of goods
→B

37. Privatization is:

A) Nationalizing private companies
B) Cutting foreign investments
C) Transferring public sector assets to private ownership
D) Creating new taxes
→C

38. A trade-off refers to:

A) Gaining something by giving up something else
B) A balance in the stock market
C) A refund for exported goods
D) Borrowing with interest
→A

39. A speculative bubble often leads to:

A) Sustainable growth
B) Long-term employment
C) Sudden market collapse
D) Government surplus
→C

40. A credit crunch refers to:

A) Easier lending policies
B) A reduction in the availability of loans
C) Tax relief on corporate credit
D) Increasing consumer confidence
→B

41. Public debt is:

A) The amount households owe to banks
B) Money borrowed by individuals
C) Government borrowing to fund expenditures
D) Private investment returns
→C

42. An index fund is:

A) A fixed savings account
B) A type of mutual fund designed to follow a market index
C) A list of public companies
D) A tax form
→B

43. The word macroeconomic refers to:

A) A company’s performance
B) National or global economic systems
C) Household budgets
D) Banking regulations
→B

44. If something is asset-backed, it means:

A) It is protected by law
B) It is supported by a tangible item of value
C) It is owned by shareholders
D) It has no inherent value
→B

45. What does offshore account mean?

A) A domestic account in a national bank
B) An account held in a foreign country to reduce taxes or increase privacy
C) A savings bond
D) A loan issued to a shipbuilding firm
→B

46. The term currency peg means:

A) A currency that floats freely
B) A currency whose value is tied to another
C) Currency devaluation by inflation
D) Cryptocurrency valuation
→B

47. Human capital refers to:

A) Machinery used in production
B) The skills, knowledge, and experience of workers
C) Office property
D) Corporate shares
→B

48. A recession-proof industry is one that:

A) Stops operating during economic crises
B) Is guaranteed government funding
C) Remains stable despite economic downturns
D) Changes pricing structures constantly
→C

49. Quantitative easing is a process where central banks:

A) Increase tax revenue
B) Cut wages to reduce inflation
C) Inject money into the economy to stimulate growth
D) Borrow money from other countries
→C

50. A trade embargo means:

A) Reducing import taxes
B) Promoting bilateral trade
C) Banning trade with a particular country
D) Encouraging domestic tourism
→C