303 Political Factors

Question 1

which political factors may have a negative impact on a business?

Answer 1

political instability, increased taxation, new laws.

Question 2

which political factors may have a positive impact on a business?

Answer 2

availability of grants, reduced taxes, political stability, subsidies.

Question 3

what is the government’s role in providing businesses with a stable framework to operate in?

Answer 3

low unemployment, stable prices/ low inflation, economic growth.

Question 4

what is a subsidy?

Answer 4

a payment from the government to individuals or businesses.

Question 5

what does a subsidy normally involve?

Answer 5

payment from gov to suppliers to reduce costs of reduction to increase output.

Question 6

examples of subsidies?

Answer 6

electric cars, public transport, green energy.

Question 7

why are farmers given subsidies?

Answer 7

ensures they can make a profit as they can sell products at competitive price.

Question 8

how can a subsidy benefit a business?

Answer 8

lower prices can attract customers, increase demand to reach economies of scale, reducing average cost of production.

Question 9

what are the government’s two policies to control the economy?

Answer 9

fiscal and monetary.

Question 10

what is fiscal policy?

Answer 10

policies for taxation and public spending.

Question 11

what is monetary policy?

Answer 11

policies for exchange rates and interest rates.

Question 12

what is taxation?

Answer 12

payment to government made by business and individuals to pay for public services.

Question 13

what is income tax and the impact of increasing it?

Answer 13

taken off employee’s salary, resulting in less money to spend on consumer goods and services.

Question 14

what is value added tax and the impact of increasing it?

Answer 14

a tax added to goods and services, rise in VAT increases prices.

Question 15

what is corporation tax and the impact of increasing it?

Answer 15

tax on company’s profits. rise in tax means less profit so less company investment and less dividends paid to sharegolders.

Question 16

what is national insurance and the impact of increasing it?

Answer 16

payment made by both employee and employer. increasing this will increase costs which would increase prices.

Question 17

what is council tax and the impact of increasing it?

Answer 17

council collects rates from businesses and council tax from individuals. reduces disposable income but money spent on local services (which provides jobs).

Question 18

how does public spending affect a business?

Answer 18

creates employment, leading to more disposable incomes to spend on private sector.
also creates demand for goods and services to supply public sector businesses eg school supplies or medical equipment.

Question 19

why does the government legislate and regulate business activity?

Answer 19

protect stakeholders from exploitation.

Question 20

how could the relationship between a business and the government be described as positive?

Answer 20

gov supports through subsidies and regulations such as monopolies.
public services such as healthcare and education ensure workers are healthy and skilled.
purchaser of private goods so creates sales, profits and employment.
international trading partners.

Question 21

how could relationship between government and business be described as negative?

Answer 21

taxes take money
activity restrictions such as minimum wage/health and safety laws increase costs.
employee rights can make it harder to increase productivity.

Question 22

how does the government support businesses with international expansion?

Answer 22

provides more affordable/profitable opportunities such as partnerships with other countries to drive trade. knock on effect of employment.

Question 23

what is a pressure group?

Answer 23

not for profit organisations seeking to influence policy through political means without seeking political office itself.

Question 24

impacts of pressure groups?

Answer 24

can force business to change suppliers because if they have to change a product, their current supplier may not supply it.
relocations
change HR approach.
change marketing campaigns.

Question 25

what is direct taxation?

Answer 25

taxes on income.

Question 26

what is indirect taxation?

Answer 26

taxes on spending?

Question 27

examples of direct taxes?

Answer 27

income tax
national insurance
corporation tax
inheritance tax.

Question 28

examples of indirect taxes?

Answer 28

value added tax
customs duties
council tax

Question 29

what are interest rates?

Answer 29

cost of borrowing and reward of saving.

Question 30

who sets/controls interest rates?

Answer 30

bank of england.

Question 31

what happens to interest rates if inflation is high?

Answer 31

increase

Question 32

what happens to interest rates if inflation is low?

Answer 32

decrease.

Question 33

what is contractionary policy?

Answer 33

to slow down economic growth to reduce inflation.

Question 34

what is expansionary policy?

Answer 34

increase economic growth to increase business activity and demand.

Question 35

what sort of policy would increasing VAT be?

Answer 35

contractionary fiscal policy.

Question 36

how can expansionary monetary policy benefit a business and its stakeholders?

Answer 36

makes it cheaper to borrow money which can be invested.

Question 37

how can contractionary fiscal policy slow down a business seeking to expand?

Answer 37

if taxes increase, so do business costs.

Question 38

why might expansionary fiscal policy increase demand for luxury goods?

Answer 38

if taxes are reduced, price will reduce.

Question 39

why might contractionary monetary policy lead to reduced sales revenue?

Answer 39

may have less to spend on marketing/advertising.

Question 40

what are some business regulation areas?

Answer 40

consumer rights
employment rights
advertising rights
product standards
health and safety
data protection
competition laws.