21-Business and the Economy

Question 1

Economic variables

Answer 1

Inflation
Interest rates
Unemployment
Exchange rates
Levels of tax

Question 2

Inflation

Answer 2

annual percentage increase in the general levels of prices in the economy
Measured using Consumer Price Index

Question 3

Impact of inflation on business

Answer 3

Wage demands
Industrial relations issues
Products more expensive
Business costs increase (raw materials)

Question 4

Interest rates

Answer 4

cost of borrowing money expressed as a percentage

set by ECB

Question 5

Impact of high interest rates on business

Answer 5

Borrowing discourages
High mortgage repayments for consumers
High loan repayments for business

Question 6

Unemployment

Answer 6

percentage of labour force that do not have a job

Question 7

Impact of unemployment on business

Answer 7

Less disposable income
Competitive job market
Increased crime
Increased government expenditure

Question 8

Exchange rates

Answer 8

shows how much euro is worth in other currencies

euro increases-exports go down as goods are more expensive to non-euro countries.Foreign goods become cheaper-import

Question 9

Impact of high taxation on business

Answer 9

Reduced profit
Less disposable income
Price increased-VAT went from 21% to 23% in 2012

Question 10

Positive effects of business on economy

Answer 10

Job Creation
Support other businesses
competitive prices
creation of wealth

Question 11

Negative effects of business on economy

Answer 11

Price increases
Environmental damage
Pressure on infrastructure
Closure

Question 12

How can government create a climate for businesses

Answer 12

expenditure
agencies
tax
grants 
regulation

Question 13

creating a climate for business-government expenditure

Answer 13

support irish businesses-buy billions of euros worth of products and services e.g. hospital beds
better infrastructure
pays wages-disposable income

Question 14

Government agencies that help business

Answer 14

IDA
Enterprise Ireland
Failte Ireland
Bord Bia

Question 15

IDA

Answer 15

attract foreign direct investment
grants
promote ireland’s educated workforce and low corporation tax

Question 16

enterprise ireland

Answer 16

help indigenous irish firms
draw up business plan
grants
share capital

Question 17

bord bia

Answer 17

represent irish food industry abroad

Question 18

Failte ireland

Answer 18

provide advice to tourism industry
train people to work in tourism sector
promote ireland as a tourist destination

Question 19

creating a climate for businesses by government taxation

Answer 19

reduce VAT
reduce emplyer PRSI-encourage more employment
Reduce corporation tax-more profits to expand
reduce PAYE/USC-more disposable income

Question 20

Government grants

Answer 20

attract transnationals and encourage people to set up businesses

Question 21

How government affects the labour force

Answer 21

Taxation-income tax has gone up and USC introduced-less disposable income
Government expenditure-investment in education led to one of most educated workforces
Government regulation-protects employee rights
Employer-civil service,public service,state owned enterprises