government objectives & policies Flashcards
what are barriers to entry
restrictions that make it difficult for new firms to enter the market
what are mergers
when two or more businesses join together to form one large business
what is dumping
when businesses sell goods in another country below the cost
what are trade barriers
measures designed to restrict trade
what are subsidies
financial support given to domestic producers to help them compete with overseas firms
what are administrative barriers
strict regulations used to make imports more difficult, such as health and safety regulations
what are the two types of taxes
direct tazes and indirect taxes
what are direct taxes
levied on income or profits
what are indirect taxes
levied on producers and passed to consumers through higher prices
what is fiscal policy
changes to taxation and government spending to stimulate aggregate demand in an economy
how does government spending affect businesses
higher government spending increases people’s incomes, leading to more disposable income and higher consumer spending, which benefits businesses
how can the government affect business activity through infrastructure provision
by spending money on infrastructure projects, the government helps private construction companies increase their revenues and profits
what is the role of legislation in business
provides a legal framework for businesses to operate within, ensuring that vulnerable groups are protected and that businesses meet stakeholder needs
what is competition policy
competition policy encourages the growth of small firms, often through subsidies or grants, to make them more competitive with larger firms
how does lowering barriers to entry benefit consumers
lowering barriers to entry allows more firms to enter the market, increasing consumer choices and reducing prices
what is anti-competitive legislation
restricts the formation of monopolies or mergers that could exploit consumers by increasing prices
what is environmental legislation
environmental legislation imposes strict laws on businesses to reduce pollution and mitigate negative environmental impacts
what is trade policy
trade policy refers to measures, like trade barriers, used by governments to protect domestic industries and encourage exports
how do higher interest rates affect businesses
higher interest rates increase borrowing costs, reduce consumer disposable income, and lower business profits
how do higher interest rates affect consumer spending
higher interest rates make borrowing more expensive, reducing demand for goods and services and leading to lower living standards as consumers purchase less
how do lower interest rates affect consumer spending
lower interest rates make borrowing cheaper, encouraging consumers to borrow more and spend, which can increase demand for goods and services
how do lower interest rates affect businesses
lower interest rates make borrowing cheaper, increasing consumer spending but reducing savings rewards, which can affect businesses that rely on savings
