CIPS Procurement and Supply Environments L3M1 Exam Questions

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Total 90 questions
Question 1

The abbreviation 'SME' stands for ...



Answer : C

This is the standard definition, widely used, and given in your textbook.


Question 2

Value for money can be defined by 'the three E's',

Select those which are not part of 'the 3 E's'.



Answer : A, B, C, D

The 3 E's are economy, efficiency, effectiveness. The 3 E's are often seen as part of the role of pro-curement in an organisation.

Therefore all the other answers here should be selected, as they are not part of the 3 E's.

The 3 E's are often seen as part of the role of procurement in an organisation.


Question 3

Think carefully.

There is low consumer demand; production capacity is unused; prices are stable or are falling; busi-ness profits are low; unemployment is high; and business confidence is low. Is this:



Answer : D

This is a description of a depression - the worst of all economic situations, which governments will do almost anything to avoid.

A recession is a decline in the performance of the economic factors mentioned (unemployment ris-es), and technically in the UK, a recession would be two successive quarters of decline (reducing economic activity / reducing GDP). A recovery is coming out of recession, and a boom is when the economy is in the opposite state to the depression shown in the question. Generally, an economy's behaviour is cyclical.


Question 4

A 'mixed economy' is:



Answer : B

It is an economy in which the public and private sectors work together. This is now the norm in most countries, with private sector involvement to a greater or lesser extent. In North Korea there is a (rare example of a) planned economy, and in the United States there is a heavily market-led (pri-vate sector) economy.


Question 5

Fiscal policy deals with:



Answer : C

The correct answer simply describes what fiscal policy is.

This topic is often mentioned or discussed in serious radio / TV news broadcasts.


Question 6

In terms of interest rates, the 'base rate' is:



Answer : A

The base rate is often used as a basis for the calculation of other rates, some of which eg credit card repayment rates, bear no resemblance to the base rate. Some longer-term, perhaps more responsible, lending, uses changes in the base rate to determine a repayment rate for debt eg mortgage rates. For credit card repayment rates and for late payments in business contracts there is often a considerable amount of freedom to agree relevant rates, but government is often encouraged to influence to try to ensure some level of sanity.

The answer which references procurement of a new 'instrument' is an attempt at humour, 'base' be-ing a type of guitar.


Question 7

As well as a Goods Received Note (GRN), three-way matching to authorise a payment to a supplier should involve two other documents. Which two?



Answer : B, C

The GRN, invoice and PO should all match to enable payment to occur.

The BoM will help calculate the extent of the requirement, prior to the PO being issued.

An SLA will help ensure adequate and contractual delivery of any services required.


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Total 90 questions