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6.1. Economic issues
A subsection of Business Studies, 7115, through 6. External influences on business activity
Listing 6 of 6 questions
The economy of country A is in recession. To deal with the problems caused by the recession, the Government has cut interest rates and reduced taxes. These changes have had a big impact on businesses in country A. The Government has also introduced laws to protect employees at work. Some people have suggested that the Government should give grants and subsidies to private sector businesses to help them survive. What is meant by the term ‘recession’? Identify two ways in which consumers might be affected by a recession. Way 1: Way 2: Identify and explain two consequences of a fall in interest rates on businesses in country A. Consequence 1: Explanation: Consequence 2: Explanation: Identify and explain three ways by which employees can be protected at work by Government laws. Way 1: Explanation: Way 2: Explanation: Way 3: Explanation: Do you think that Governments should give financial support to private sector businesses to survive in a recession? Justify your answer.
7115_s11_qp_11
THEORY
2011
Paper 1, Variant 1
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Nellis is a public limited company. It specialises in building large luxury houses. Over the past 3 years its profits have increased as the country is experiencing an economic boom. ‘It’s not all good news – the Government has announced plans to increase interest rates and introduce new legal controls to protect the environment’ said the Managing Director. He believes these new legal controls to protect the environment will only make businesses (such as Nellis) less profitable. What is meant by an ‘economic boom’? Identify two stages (other than boom) of the business cycle. Stage 1: Stage 2: Explain how a rise in interest rates might affect Nellis. Identify two stakeholder groups. Explain why each group is important to this business. Stakeholder group 1: Explanation: Stakeholder group 2: Explanation: The Managing Director believes that the new legal controls to protect the environment will only make businesses (such as Nellis) less profitable. Do you agree? Justify your answer.
7115_w15_qp_12
THEORY
2015
Paper 1, Variant 2
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The Government of country H is concerned about the effect of business activity on the environment. It wants to encourage sustainable development. To do this, it is planning to introduce laws to encourage environmentally-friendly production methods. A number of businesses will be affected by these new laws. The Government of country H has collected the data shown in Table 1. Gross Domestic Product (GDP) measures the value of the total output produced in a country in one year. The GDP of country H has risen from $625m in 2000 to $825m in 2011. Table 1: Percentage of GDP by different sectors % of GDP Primary sector Secondary sector Tertiary sector What is meant by ‘tertiary sector’? What is meant by ‘sustainable development’? Identify and explain two changes between 2000 and 2011 that are shown in Table 1. Change 1: Explanation: Change 2: Explanation: Identify and explain three ways a Government could encourage more businesses to set up in its country. Way 1: Explanation: Way 2: Explanation: Way 3: Explanation: Do you think that all businesses will be affected by the introduction of the new laws to encourage environmentally-friendly production methods? Justify your answer.
7115_s12_qp_11
THEORY
2012
Paper 1, Variant 1
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REW has won many awards for the design and style of its carpets and rugs. All the wool it uses is from local suppliers. REW’s objective for this year is to survive and remain in business. The Managing Director is concerned that the country’s Gross Domestic Product has been falling for some time. During the recession the Managing Director plans to start selling REW’s products in other countries. Market research suggests demand would be high. Table 2: Extract from REW’s accounts 1.5 Current ratio 1:1 1.2:1 Acid test ratio 16% 20% Profit margin What is meant by ‘Gross Domestic Product’? Identify two possible effects on businesses from falling Gross Domestic Product. Effect 1: Effect 2: Identify and explain two reasons why REW’s objectives might change over time. Reason 1: Explanation: Reason 2: Explanation: 1 1 Identify and explain the effect on REW of the changes in the following ratios. Change in acid test ratio: Explanation of effect: Change in profit margin: Explanation of effect: Do you think REW should start selling its products in other countries? Justify your answer. [ 1 1
7115_s19_qp_12
THEORY
2019
Paper 1, Variant 2
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The structure of the economy in country W has changed greatly in the last ten years. Primary sector activities have declined in importance, but a range of new tertiary sector businesses have started up. Output in the secondary sector has increased, but employment in this sector has fallen. These changes have caused social and economic problems, with many people finding it difficult to get jobs. The wages of workers in the primary sector businesses have been falling. What is meant by ‘primary sector activities’? Identify two examples of businesses that would be classified as being in the tertiary sector. Example 1: Example 2: Identify and explain two possible reasons why workers’ wages in primary sector businesses are falling. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three possible causes of the structural changes that have occurred in country W. Cause 1: Explanation: Cause 2: Explanation: Cause 3: Explanation: Do you think that the Government should subsidise primary sector businesses to stop them from closing? Justify your answer.
7115_w11_qp_12
THEORY
2011
Paper 1, Variant 2
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Table 2 gives data about the economy of country C. Table 2 National income Year per person ($) Inflation (%) Unemployment (%) 1.5 The economy of country C is in recession. The Government wants to create more jobs by encouraging more businesses to start up. However some pressure groups are against this because they think that more businesses will cause more external costs. What is meant by ‘recession’? Identify two possible reasons why national income per person has fallen between 2010 and 2012. Reason 1: Reason 2: Identify and explain two ways that a Government could help new businesses to start up. Way 1: Explanation: Way 2: Explanation: Identify and explain three external costs that might be caused by an increase in the number of businesses in country C. Cost 1: Explanation: Cost 2: Explanation: Cost 3: Explanation: Do you think that new start-up businesses can be successful in country C? Justify your answer.
7115_w13_qp_11
THEORY
2013
Paper 1, Variant 1
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Questions Discovered
6