Unit 1 - Business Activity and Influences on Business (Government objectives and policies)

Question 1

Government spending

Answer 1

Provide a range of public services.

Question 2

Trade policies

Answer 2

Some governments up in restrictions called protectionism on foreign trade.
They do this to:
- Protect local jobs
- Protect infant industries
- Prevent dumping
- Raise revenue from tariffs

Question 3

Trade barriers

Answer 3

Tariffs: A tax on imports, making them more expensive.
Quotas: A limit on the number of goods that can enter the country.
Subsidy: Giving financial supports to domestic producers and exporters
Administrative barriers: Using regulations (environmental and health and safety) to make it more difficult to enter the market.

Question 4

Impact of interest rates on business and consumer spending (business)

Answer 4

High interest rate:
- Higher repayments on loans.
- Less likely to take out new loans to buy capital goods.
- Less purchases from consumer’s.

Low interest rate:
- Lower repayments on loans.
- More likely to take out new loans to buy capital goods.
- More purchases from consumer’s.

Question 5

Impact of interest rates on business and consumer spending (Consumer spending)

Answer 5

High interest rate:
- Higher repayments on loans ans mortgages.
- Less likely to take out new loans.
- Conserve spending.
- Save more in bank.

Low interest rate:
- Lower repayments on loans and mortgages.
- More likely to take out new loans.
- More spending and less saving.