Economy and Business

Question 1

centrally planned

Answer 1

where the gov makes all the decisions on what goods and services are produced
eg Cuba

Question 2

free economy (market)

Answer 2

where the entrepreneur decides what goods and services are produced
eg USA

Question 3

mixed economy

Answer 3

a combination of the gov and the entrepreneur decide what goods and services are produced
eg Ireland

Question 4

how gov affects business

Answer 4

budgetary policy
employer
taxation
government planning
infrastructural development
regional development
local government
government agencies

Question 5

budgetary policy

Answer 5

prepared annually and sets out the sources of revenue for the year and all the spending it intends to do in the year
divided into current and capital

Question 6

employer

Answer 6

gov is biggest employer in Ireland

employs directly through public sector or indirectly through public private partnerships eg motorways

Question 7

taxation

Answer 7

decisions can have positive/ negative effects on business activity
lower tax improves business environment

Question 8

infrastructural development

Answer 8

ability of a business to operate efficiently depends greatly on the quality of a country’s infrastructure eg road, rail

Question 9

local government

Answer 9

local authorities give support to businesses in :
essential services
grants
train workforce

Question 10

government agencies

Answer 10

allocate grants to enterprise to help create a suitable climate for business activity
eg Enterprise Ireland, IDA Ireland

Question 11

IDA Ireland

Answer 11

responsible for attracting foreign direct investment

offer funding, information and provide networking contacts

Question 12

Enterprise Ireland

Answer 12

helps Irish indigenous companies achieve global success
offer funding, information, advice, networking contacts and help them improve their productivity to improve competitiveness in the market

Question 13

how gov could help Irish businesses

Answer 13

• increase capital expenditure eg build new infrastructure creating jobs and making ireland more attractive
• gov state agencies eg IDA Ireland
• increase current expenditure eg social welfare payments = greater spending power
• invest in education and training

Question 14

why does gov regulate business

Answer 14

protect consumer - consumer laws
protect environment - EPA
protect employees - WRC etc
protect general public - GDPR

Question 15

how does gov affect labour force

Answer 15

largest employer in Ireland
national wage agreements
keep tax low to allow expansion + more workers employed
gov regulation - unfair dismissals

Question 16

inflation

Answer 16

sustained increase in the general level of prices in a country from one year to the nest (usually a year)
measured by CPI

Question 17

unemployment

Answer 17

percentage of people in an economy willing and able to work but who cannot find work

Question 18

problems of high unemployment

Answer 18

reduced demand, fall in earnings
gov revenue falls
gov spending rises
increase in emigration

Question 19

benefits of high unemployment

Answer 19

easier recruitment

wage levels stabilise

Question 20

interest rates

Answer 20

cost of borrowing
rates depend on the demand and supply of money
controlled by ECB

Question 21

high interest rates

Answer 21

demands for goods fall
business investment falls
entrepreneurship decreases
may lead to an increase in prices

Question 22

low interest rates

Answer 22

increases spending
may lead to inflation
increase in investment
increase in business confidence

Question 23

high tax affecting business

Answer 23

demand of consumers falls
high vat lowers demand
high rate of corp tax removes incentive to invest
high corp tax takes away from profits

Question 24

low tax affecting business

Answer 24

increases firms after tax profit
vat falls - increased demand
decreased PAYE strengthens spending power
less revenue to gov

Question 25

exchange rates

Answer 25

cost of one currency in terms of another
strong € = exports will be less competitive
strong € = foreign goods become cheaper in Ireland

Question 26

when value of a currency falls

Answer 26

exports are cheaper
tourism benefits
imports are more expensive
imported inflation

Question 27

economic variables

Answer 27

interest rates
inflation
unemployment
taxation

Question 28

positive impact of business on the economy

Answer 28

employment
spin offs
inflation - competition between businesses can lead to lower prices, lower inflation

Question 29

negative impact of business on the economy

Answer 29

environment
prices
competition - small businesses may not survive
pressure on infrastructure

Question 30

suitable business climate

Answer 30

low interest rates
low inflation
low unemployment
low taxation
low national debt
stable exchange rate