1.1 Meaning and Concept of Investment (Quiz)

1. Investment primarily refers to:
A. Spending resources only on current consumption
B. Committing resources to obtain future benefits
C. Collecting taxes from businesses
D. Reducing productive capacity

Answer: B. Committing resources to obtain future benefits

2. Which element distinguishes investment from ordinary consumption?
A. Present satisfaction
B. Government ownership
C. Expectation of future returns
D. Absence of cost

Answer: C. Expectation of future returns

3. In economics, investment generally means:
A. An addition to productive capital
B. Transfer of existing currency
C. Purchase of consumer goods
D. Reduction in inventories

Answer: A. An addition to productive capital

4. Which of the following is a productive investment?
A. Purchasing machinery for a factory
B. Paying a household electricity bill
C. Buying food for immediate consumption
D. Paying a personal fine

Answer: A. Purchasing machinery for a factory

5. A fundamental relationship in investment exists between:
A. Tax and subsidy
B. Imports and exports
C. Risk and return
D. Wages and rent

Answer: C. Risk and return

6. Which is a possible return on investment?
A. Dividend
B. Depreciation only
C. Tax penalty
D. Production stoppage

Answer: A. Dividend

7. Public investment is mainly undertaken by:
A. Households only
B. Government institutions
C. Foreign tourists
D. Informal consumers

Answer: B. Government institutions

8. Investment contributes to economic development by:
A. Reducing productive capacity
B. Discouraging technology
C. Creating production and employment
D. Eliminating all business risks

Answer: C. Creating production and employment

9. Investment policy consists mainly of:
A. Cultural traditions and customs
B. Laws, regulations, incentives and institutions
C. Household consumption decisions
D. Weather-related measures

Answer: B. Laws, regulations, incentives and institutions

10. An effective investment policy should provide a business environment that is:
A. Uncertain and restrictive
B. Secretive and unstable
C. Transparent and predictable
D. Entirely unregulated

Answer: C. Transparent and predictable