Fundamentals of Business Activities Test 25

Functional Finance is a heterodox macroeconomic theory developed by Abba Lerner during World War II that seeks to eliminate economic insecurity (i.e. the business cycle) through government intervention in the economy. Functional finance emphasizes the end result of interventionist policies on the economy and is based on three major beliefs:
1, It is the role of government to stave off inflation and unemployment by controlling consumer spending through the raising and lowering of taxes.
2. The purpose of government borrowing and lending is to control interest rates, investment levels and inflation.
3.The government should print, hoard or destroy money as it sees fit to achieve these goals.

Economic activities are related to manufacturing, distribution, exchange and consumption of goods and services. The most important aim of economic activity is the production of goods and services with a view to make them available to the consumer. 

Non-economic activity is an action perform willingly, with the aim of providing services to others lacking any regard as to monetary gain. Individuals human activities which are assumed for individual satisfaction or to satisfy human sentiment are non-economic activities.

The correct option is A.

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India "to combine and adjust the law involving to foreign exchange with the purpose of facilitating external trade and payments and for promoting the arranged development and protection of the foreign exchange market in India". 

It was passed in the winter session of Parliament in 1999; replace the Foreign Exchange Regulation Act (FERA). This act makes offences related to foreign exchange civil offences. It extends to the whole of India, replacing FERA, which had become mismatched with the pro-liberalization policy of the Government of India. 

It enables a new foreign exchange management regime reliable with the rising framework of the World Trade Organization (WTO). It also covered the way for the introduction of the Prevention of Money Laundering Act, 2002, which came into effect from 1 July 2005.

Thus, the correct option is D.

The social objectives of a business are:-

1. Supply of desired quality of products
2. Avoidance of unfair trade practices 
3. Employment generation 
4. Social service or community service
5. Avoidance of pollution 

In economic terms, constant returns to scale is when a firm changes its inputs with the results being exactly the same change in outputs (production). In other words, if a firm increases its inputs they will see a proportional increase in production (or outputs). 

The similar can be true if a firm decreases its inputs and that results in a proportional decrease in outputs. Constant returns to scale take place when increasing the number of inputs leads to an equivalent increase in the output.

Thus, the correct option is A.