UK Financial Market Quiz! Trivia

1. Which ONE of the following is the usual measure of the total value of goods and services produced within the UK?

GNP

GDP

RPI

PSNCR

GDP is Gross Domestic Product - it is used as a measure of the UK’s output. It is the total of consumer spending, investment and government spending plus the value of exports minus the value of imports.

Explanation

GDP is Gross Domestic Product - it is used as a measure of the UK’s output. It is the total of consumer spending, investment and government spending plus the value of exports minus the value of imports.

2. Interest rates are set by the Monetary Policy Committee of which ONE of the following organizations?

The Office of Fair Trading

The Treasury

The Department of Trade and Industry

The Bank of England

The Monetary Policy Committee of the Bank of England sets interest rates.

Explanation

The Monetary Policy Committee of the Bank of England sets interest rates.

3. Which one of the following factors is most likely to influence foreign exchange rates?

Mortgage rate

Increase in money supply

Interest rates

Country's borrowing requirements

The two main factors underlying the value of a currency and foreign exchange rates are the underlying economic performance of the country and comparative interest rates.

Explanation

The two main factors underlying the value of a currency and foreign exchange rates are the underlying economic performance of the country and comparative interest rates.

4. Which ONE of the following measures the difference between a country's exports and imports?

Gross National Product

Gross Domestic Product

Balance of Payments

Public Sector Net Cash Requirement

The balance of payments is a summary of all the transactions between a country and the rest of the world and will measure the difference as a deficit or surplus. Gross National Product is the measure of a country’s output (Gross Domestic Product) plus net property income from abroad. Public Sector Net Cash Requirement is the difference between Government expenditure and Government income.

Explanation

The balance of payments is a summary of all the transactions between a country and the rest of the world and will measure the difference as a deficit or surplus. Gross National Product is the measure of a country’s output (Gross Domestic Product) plus net property income from abroad. Public Sector Net Cash Requirement is the difference between Government expenditure and Government income.

5. Which ONE of the following describes the shortfall between government revenues and expenditure?

PSDR

PSNCR

RPI

GDP

If the government spends more than it receives from tax and other revenues, the shortfall is known as the Public Sector Net Cash Requirement (PSNCR) which must be borrowed.

Explanation

If the government spends more than it receives from tax and other revenues, the shortfall is known as the Public Sector Net Cash Requirement (PSNCR) which must be borrowed.

6. Which ONE of the following is specifically adjusted for the impact of overseas investment in UK businesses?

GNP

PSNCR

GDP

Balance of payments

GDP (Gross Domestic Product) is a measure of the total of consumer, investment, and government spending plus the value of exports minus the value of imports. GNP (Gross National Product) is the total of GDP plus the income accruing to domestic residents from investments abroad minus income earned in domestic markets accruing to foreigners abroad. The figure, therefore, includes the impact of overseas holdings and investments in businesses.

Explanation

GDP (Gross Domestic Product) is a measure of the total of consumer, investment, and government spending plus the value of exports minus the value of imports. GNP (Gross National Product) is the total of GDP plus the income accruing to domestic residents from investments abroad minus income earned in domestic markets accruing to foreigners abroad. The figure, therefore, includes the impact of overseas holdings and investments in businesses.

7. Which ONE of the following financial institutions acts as a depositary for portfolios as a core service?

Custodians

Insurance companies

Stockbrokers

Retail banks

Custodians are banks that specialize in safe custody services, looking after portfolios of shares and bonds on behalf of others.

Explanation

Custodians are banks that specialize in safe custody services, looking after portfolios of shares and bonds on behalf of others.

8. Which ONE of the following is NOT used to measure inflation?

HICP

RPI

GDP

RPIX

GDP is the gross domestic product and is not used to measure inflation. RPI is the retail price index, RPIX is the retail price index excluding mortgage interest and HICP is the harmonized index of consumer prices.

Explanation

GDP is the gross domestic product and is not used to measure inflation. RPI is the retail price index, RPIX is the retail price index excluding mortgage interest and HICP is the harmonized index of consumer prices.

9. Which ONE of the following is the index used as the official measure of inflation?

MRI

GDP

RPI

HICP

The correct answer is HICP. HICP stands for Harmonized Index of Consumer Prices and is used as the official measure of inflation. It is a measure of price changes of goods and services consumed by households and is used by the European Union and European Central Bank to monitor inflation rates across member countries.

Explanation

The correct answer is HICP. HICP stands for Harmonized Index of Consumer Prices and is used as the official measure of inflation. It is a measure of price changes of goods and services consumed by households and is used by the European Union and European Central Bank to monitor inflation rates across member countries.