PAPER 2 finals

Question 1

what is meant by GDP?

Answer 1

Gross Domestic Product (GDP) is the value of goods and services produced by a country during a certain period.

Question 2

what is an impact of GDP + give an example?

Answer 2

Changes in GDP can affect a business’ decision making as GDP growth is likely to coincide with an increase in demand which businesses must respond to.

For example, in a GDP boom, a business may make a strategic decision to diversify and enter a new market.

Question 3

what is meant by taxation?

Answer 3

Taxation refers to the tax paid by businesses on any profits made.

Question 4

what is the impact of changes in taxation?

Answer 4

Changes in taxation can affect a business’ decision making. For example, increased taxation will reduce profit after tax which can affect strategic investment decisions.

If there is less money left over to invest, then the business is likely to have to prioritise better.

Question 5

what is meant by exchange rates?

Answer 5

Exchange rates are the value of one currency expressed in terms of another currency.

Question 6

share is the impact of changes on exchange rates?

Answer 6

Changes in the exchange rate can affect the decision-making process of a business which imports from or exports to a country with a different currency.

Question 7

what is meant by inflation?

Answer 7

Inflation refers to the general increase in price levels and the reduction in the real value of money.

Question 8

what is the impact of changes in inflation?

Answer 8

Changes in inflation can affect the decision-making process of a business because rising costs may mean that a business has to increase its prices to maintain its profits at the same level.

Question 9

what is meant by fiscal policy?

Answer 9

Fiscal policy refers to the use of government expenditure and taxation to influence demand.

Question 10

what is the impact of changes in fiscal policy?

Answer 10

Changes in government expenditure and taxation can increase or decrease demand which businesses may need to respond to.

Question 11

what is meant by monetary policy?

Answer 11

Monetary policy refers to the controlling of money supply and interest rates to control economic activity.

Question 12

what is the impact of changes in monetary policy?

Answer 12

Increasing interest rates may affect business decision making as consumers may increase their savings and therefore decrease spending which can affect demand for a business’ products.

Question 13

what is leave by open trade and protectionism?

Answer 13

Open trade and protectionism refer to the ability of countries to trade either with or without barriers to trade.

Question 14

what is impact impact of protectionism?

Answer 14

Protectionist measures can reduce international trade which can affect a business importing and exporting goods and services.

Question 15

what is meant by globalisation?

Answer 15

Globalisation is the increasing trend for individual markets to become unified and worldwide.

Question 16

what is an advantage of globalisation?

Answer 16

Globalisation offers businesses opportunities to expand and target international markets.

Question 17

what is an disadvantage of globalisation?

Answer 17

Globalisation increases competition for local businesses and this can reduce market share and sales revenue.

Question 18

what are some advantages of targeting emergent economies?

Answer 18

Targeting emerging economies can help a business to extend the product life cycle for its goods and services.

Emerging economies offer business new markets to target which can increase sales volume.

Emerging economies offer businesses increased access to labour resources often at a reduced cost compared to the labour market in the business’ home country.