Chapter 3: The relationship between businesses and the political and legal environment Flashcards
What is government intervention?
Government intervention means government policy based on the belief that government should exert a strong influence on the economy, rather than allowing market forces to dictate conditions.
What is a monetary policy?
A monetary policy means controlling the money supply and the rate of interest in order to influence the level of spending and demand in the economy.
What is a fiscal policy?
Fiscal policy is the use of taxation and government expenditure to influence the economy.
What is the impact of monetary and fiscal policies on the economy and business?
Monetary and Fiscal policies can be used to influence the economy. For example, to reduce the effects of a recession and to encourage growth.
How can the impact of recession be alleviated?
By lowering interest rates to encourage investment and consumer spending
Cutting taxes to give people more spending power
Increasing government spending
What are the benefits of the an enlarged EU on UK businesses?
Access to a market of 495 million people
More competition, which may lead to improved efficiency, lower costs and more innovation
Opportunities for economies of scale, lower costs and increased specialisation
Greater mobility of labour
Firms can set up anywhere in the EU
What are the types of legislation relating to business?
Employment legislation Consumer protection legislation Environmental protection legislation Health and Safety legislation Competition Policy
What is employment legislation?
This aims to ensure that employees and employers act fairly in dealing with each other
What is consumer protection legislation?
This aims to safeguard consumers from exploitation or exposure to unsafe products or services.
What is an environmental protection legislation?
This includes EU directives on a range of issues including air quality and the collection, transport, recovery and disposal of waste.
What is a Health and Safety legislation?
This aims to provide a safe working environment for employees.
What is a competition policy?
This involves the use of legislation and regulation to ensure that all businesses are able to compete fairly with each other.
What are the implications of legislation for business?
A firms reputation may improve as a result of complying with legislation
Additional costs will be incurred in order to comply with the legislation
