government objectives & policies

Question 1

what are barriers to entry

Answer 1

restrictions that make it difficult for new firms to enter the market

Question 2

what are mergers

Answer 2

when two or more businesses join together to form one large business

Question 3

what is dumping

Answer 3

when businesses sell goods in another country below the cost

Question 4

what are trade barriers

Answer 4

measures designed to restrict trade

Question 5

what are subsidies

Answer 5

financial support given to domestic producers to help them compete with overseas firms

Question 6

what are administrative barriers

Answer 6

strict regulations used to make imports more difficult, such as health and safety regulations

Question 7

what are the two types of taxes

Answer 7

direct tazes and indirect taxes

Question 8

what are direct taxes

Answer 8

levied on income or profits

Question 9

what are indirect taxes

Answer 9

levied on producers and passed to consumers through higher prices

Question 10

what is fiscal policy

Answer 10

changes to taxation and government spending to stimulate aggregate demand in an economy

Question 11

how does government spending affect businesses

Answer 11

higher government spending increases people’s incomes, leading to more disposable income and higher consumer spending, which benefits businesses

Question 12

how can the government affect business activity through infrastructure provision

Answer 12

by spending money on infrastructure projects, the government helps private construction companies increase their revenues and profits

Question 12

what is the role of legislation in business

Answer 12

provides a legal framework for businesses to operate within, ensuring that vulnerable groups are protected and that businesses meet stakeholder needs

Question 13

what is competition policy

Answer 13

competition policy encourages the growth of small firms, often through subsidies or grants, to make them more competitive with larger firms

Question 14

how does lowering barriers to entry benefit consumers

Answer 14

lowering barriers to entry allows more firms to enter the market, increasing consumer choices and reducing prices

Question 15

what is anti-competitive legislation

Answer 15

restricts the formation of monopolies or mergers that could exploit consumers by increasing prices

Question 16

what is environmental legislation

Answer 16

environmental legislation imposes strict laws on businesses to reduce pollution and mitigate negative environmental impacts

Question 17

what is trade policy

Answer 17

trade policy refers to measures, like trade barriers, used by governments to protect domestic industries and encourage exports

Question 18

how do higher interest rates affect businesses

Answer 18

higher interest rates increase borrowing costs, reduce consumer disposable income, and lower business profits

Question 19

how do higher interest rates affect consumer spending

Answer 19

higher interest rates make borrowing more expensive, reducing demand for goods and services and leading to lower living standards as consumers purchase less

Question 20

how do lower interest rates affect consumer spending

Answer 20

lower interest rates make borrowing cheaper, encouraging consumers to borrow more and spend, which can increase demand for goods and services

Question 20

how do lower interest rates affect businesses

Answer 20

lower interest rates make borrowing cheaper, increasing consumer spending but reducing savings rewards, which can affect businesses that rely on savings