government influence

Question 1

what is the monetary policy

Answer 1

this involved the use of interest rates to control the rate of interest supplies

Question 2

what if the fiscal policy

Answer 2

this involves the use of government spending, government borrowing and taxation to achieve economic objective

fiscal policy is used to influence the level of total demand in the economy

Question 3

impact of monetary policies on UK businensses 5

Answer 3

-increase in interest rates increases the amount of borrowing for businesses, this has an adverse effect on a businesses cashflow and profits

• higher interest rates cost may mean that businesses will be unable to in product development and technology- loss in the firms competitive edge , customers and market share

-higher interest rates will encouage individuals to save, reducing customer spending- less consumer spending means less demand for businesses products

-reduction in the interest rates makes borrowing cheaper and allow firms to borrow to expand- increase consumer borrowing and therefore spending consumer purcahsing

-quantitive easing is used by the government to encourage spending by introducing new money to boost the economy- allow organisations to invest in new equipment, machinery and technology

Question 4

impact of fiscal policies on UK businesses 4

Answer 4

• income tax increasing reduces customers disposable income and hence the demand for goods and services.. firms will have to devise ways to attract customers eg sales and promotions

-increase in VAT adds to the price cosumers have to pay- firms may decide to reduce the overall price of the good which will reduce the profit margins

• increase in corporation tax reduces firms net profits after tax which could put industries expansion plans on hold- this can lower dividends which will not please shareholders who may choose to sell their shares , thus impacting the market value of the organisation

-decrease in government spending will negatively impact on the ability to provide a quality service by the public sector organisation eg the nhs and state schools

Question 5

impact of legislation on UK businesses

Answer 5

• national minimum wage regulations- if the minimum wage is increased by the government, this will then lead to increased cost for UK organisations- overall reducing profit and the opportunity for growth

-health and safety legislation- organisations may have to appoint new specialist to ensure safety equipment and procedures are regularly reviewed… this may result in new safety equipment requiring to be purchased to meet standards

-the organisation may be liable for work related injuries suffered by employees which may result in compensation pay out, reducing the cashflow

-General data protection legislation- companies will have to keep a thorough record of how and when individuals give consent to use their personal data- companies will have to show a clear audit trail

Question 6

what is the social policy

Answer 6

social policy provides services and support such as child benefits, family support and state education

it aims to identify and find ways of reducing inequalities in access to services and support between social groups defined by race, migration staus, gender and age

Question 7

what’s the government assistance during Covid-19 pandemic 3

financial assistance&raquo_space;

Answer 7

• Coronavirus Job Retention scheme (furlough) allows employers to claim up to 80% of a furloughed employees wage- lower wage expense- meaning they don’t have to make costly redundancies
  -provide direct financial help to stop businesses going bankrupt

-government grant support with having more than £1 billion available - improves a firms liquidity without the requirement to repay the cash sum

-Corona virus Business Interruption Loan Scheme offers loans, overdrafts etc up tp 5 million, ease the supply of credit available to business
- interest free for the first 12 months- allows businesses to concentrate funds on survival/ core functions

Question 8

what are the ways equality legislation affect an organisations activities 6

Answer 8

-recruiting and selecting- advertisements must refrain from gender/ age bias terminology,
- when selecting employees, interviewers must ensure all questions and actions aren’t against legislation

-leave and time off- special leave for gender reassignment must be given, denying time off for disability related medical appointments are discrimination

• training and promotion- denying a suitable candidate a promotion opportunity because they have a disabled parent is discrimination by association

-dismissal- cannot force an employee to retire at this age discrimination
- cant dismiss someone because they complained about being harassed

-uniform policy- religious requirements should be considered in relation to the employees ability to do the requirement of the job

-pregnancy and maternity leave- allow time off for pregnancy related medical appointments, meaning less productivity
-its illegal to ask a female customer to leave the premises because she is breast feeding

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Question 9

how can the government support during recessions

Answer 9

monitory policy

lower interest rates on loans
supplies cash to businesses at low cost, encourages borrowing to stimulate growth/survival

• quantitative easing drives interest rates down encouraging borrowing and
  spending

Fiscal Policy
* reduced VAT can lower selling prices encouraging spending
o for example, VAT was cut from 20% to 5% on hospitality food and
accommodation, and attractions in 2020

• reduced income tax can increase disposable income which encourages
  spending
  o reduces the tax revenue available to fund support for firms
• reduced corporation tax will increase profit after tax
• reduce other taxes, for example, stamp duty was cut in 2020 to encourage
  the sale of housing