BMP4003 Business Environment Exam Paper 2022/22

This is the BMP4003 Business Environment Exam Paper for Semester 2, Examination 2021/22 of BSC (Hons) Business Management course. It includes questions related to economic cycle, fiscal policy, monetary policy, sustainable economic growth, and macroeconomic effects of Covid-19 lockdown on UK economy.

BSC (Hons) BUSINESS MANAGEMENT
SEMESTER 2, EXAMINATION 2021/22
BUSINESS ENVIRONMENT
MODULE NO: BMP4003
Exam Paper Release Date & Time: Saturday 17 September 2022 at 10:00am
Submission Cut-off Date & Time: Monday 19 September 2022 at 10:00am
---------------------------------------------------------------------------------------------------------------
ANSWER BOOKLET
All the pages of the answer booklet should be submitted including blank ones.
Please type your answers in the spaces provided.
Insert additional pages where required.
Student Name
ID Number
Section A
Q1. How would an increase in income tax influence the aggregate demand and the
aggregate supply in the economy? Use examples to illustrate your answer.

Income taxes have an impact on the aggregate demand's consumption component.
Individuals' disposable income is decreased by higher income taxes, which in turn
decreases outlay (yet by not exactly the adjustment of dispensable individual pay). The
total interest bend movements to one side because of the underlying change in utilization
brought about by the adjustment of annual duties duplicated by the multiplier. In the event
that expense rates change, the multiplier's worth will too. Higher annual duty rates will
result in a flattening of the aggregate expenditures curve and a reduction in the multiplier.
Therefore, a higher income tax rate results in a downward shift of the cumulative
expenditures curve. Similar to how the aggregate expenditure curve spins the curve higher
and steepens it, the income tax rate does the same (Chalkia and Papageorgiou, 2022).
Assuming no further changes to aggregate expenditures, the total uses bend, for instance,
will pivot toward the south by an amount equivalent to the underlying change in utilization
at the primary balance worth of genuine Gross domestic product processed in the total
allotment’s worldview. It reduces the multiplier by diminishing the slant of the total
consumptions bend. For this situation, a higher personal expense rate brings down the
slant from. Subsequently, the example is fundamentally diminished. In the speculative
model of complete spending, a higher expense brings about lower utilization and the most
noteworthy Gross Domestic Product per capita.
Q2. Explain the effectiveness of the fiscal policy in economics.
Through budgeting rules, the focal power adjusts its consumptions and
remuneration to influence the worldwide monetary framework. The law-making body can
briefly increment or decline financial turn of events, which will affect the economy, by
altering the amount of utilization and prerequisite compensation for cash. At the point
when the public authority's stock runs what is happening misfortune, for instance, it should
be boosting financial activity with fiscal lift, conversely when the general populace's power
runs a financial situation overstock, it ought to be reversing financial action through
budgetary withdrawal. The basic validity of this method can be demonstrated by using an
example similar to how the public master could utilize it to use the monetary lift to energize
financial development by expanding government use, bringing down obligatory
remuneration, or a blend of the two (Correa and Ferreira, 2022). By either straightforwardly
consuming additional labor and products from the shadow economy or by giving assets to
the individuals who may thusly spend the cash, increasing government consumption will
support economic growth more generally. Raising people's discretionary income, on the
other hand, would ultimately lead to those people consuming more labour and products.
This will indirectly have an impact on overall financial improvement.
2 of 7

Q3. Identify and describe the four stages of the ‘Economic Cycle’.
As per the discoveries of the financial cycle, the economy extends between
accommodative (improving) and deflationary stages (droop). The colloidal suspension of
the monetary cycle might be characterized utilizing markers like the GDP (all out public
result), advance expenses, aggregate organizations, and purchaser buying power. The
cycle's focal four stages are development, pinnacle, withdrawal, and despondency. The
Expansionary stage, which is the main phase of the cycle, is the point at which the
economy takes a different path somewhat rapidly, getting rates are regularly low, creation
increments, and inflationary tensions increment. Then comes the Pinnacle or Apex. A
cycle is at its level when development advances at its most inconceivable rate.
Intermittently, top improvement makes a monetary curse that requirements be fixed
(Fernandez, 2022). Whenever the economy hits a depressed spot and improvement gets,
the period of Compression follows the period of Wretchedness. Progression is hampered
by constriction, as organization and costs the two downfalls.
Q4. What can a government do to promote economic growth? Use examples to illustrate
your points.
Economic or the overall financial extension is measured by expansions in
Gross domestic product, which gauges the complete expense of all labor and products
delivered in a country during a particular year. The work of certain actions by the public
authority, for example, the consequences of expense decreases and discounts planned to
increment buyer spending, is allowed. In view of the expanded efficiency welcomed on by
this molecule movement, the economy grows. Shoppers' expanded spendings, as a result
of refunds or projected value decreases can help the economy. There is one more strategy
for helping the economy, like the possibility of liberation. One more method for
communicating it is the relaxing of limitations put on a business or a specific area of the
economy (Kohtamäki and et. al., 2022). Liberation defenders fight that prohibitive
limitations disallow organizations from growing and performing to their maximum capacity.
In result, this eases back the Gross domestic product economy's development by bringing
down business and result. Like this, building framework upgrades to help an economy's
general development can help increment a country's relative thriving. Framework spending
produces occupations since laborers are expected to finish the endorsed projects. It could
likewise prompt new monetary extension. Extra consumptions could be made in drives like
the development of another street or others that will assist the country's economy with
developing.
3 of 7

Q5. Briefly describe and explain how the Monetary Policy Committee (MPC) impact the
inflation rate?
The Lead representative, alongside the three superior agents for Money related
Approach, Monetary Solidness, and Markets and Banking, make up the Monetary Policy
Committee (MPC), which seems to have nine individuals altogether. The Main Market
analyst and four external individuals that the Chancellor chooses. The MPC might make
certain to get data and advice from sources other than the Bank of England by selecting
outside candidates. A Treasury representative also shows up at MPC gatherings. The
Budgetary delegate is permitted to express policies but is not permitted to vote. They are
planned to guarantee that the financier is appropriately educated about money related
arrangement and that the MPC is completely educated about improvements in monetary
approach and different region of the Public authority's monetary goals. Most recent
proposition in genuine loan fees affect the expense of acquiring, the openness of bank
credits, family riches, and unfamiliar money rates, all of which affect the overall
population's interest for labor and products. In the event that money related strategy raises
total interest to a level over the long-run limit of the work and capital business sectors, the
two wages and costs will begin to rise quicker. With no drawn-out responsibilities to
creation development or overt repetitiveness decrease, a proceeded with money related
strategy of low momentary genuine rates will ultimately bring about increasing expansion
and ostensible financing costs (Méndez‐León, Reyes‐Carrillo and Díaz‐Pichardo, 2022).
Section B
Q1. Explain how an economy can achieve sustainable economic growth and analyse the
different methods of measuring economic growth?
Ability to satisfy human necessities while safeguarding the climate and the regular
assets for people in the future is the objective of reasonable monetary development.
Environment has an economy, and the two are joined in numerous ways. In reality, without
it, an economy can't flourish. The environment supplies land, work, normal assets, and
capital — the useful sources of info that drive financial extension. The management of
these resources is necessary for sustainable economic growth in order to halt their
depletion and ensure their availability for future generations. Sustainability is crucial to
ensuring that natural resources can be used by future generations.
 A variety of strategies are utilized by experts and chiefs to screen monetary
development. The GDP (Gross domestic product) is the most notable and broadly
4 of 7

checked measurement (Nayal and et. al., 2022). Relative productivity indicators are
also monitored by organisations like BLS and OECD to evaluate pecuniary latent.
Although it can be challenging to achieve, many people have suggested that
expansions in the norm of life ought to be utilized to quantify monetary
advancement.
 A series of numerical issues have been noted by the OECD that affect GDP. The
amount that functional and innovative progression added to total consumptions was
estimated utilizing Multi-Factor-Productivity (MFP), which hypothetically copies the
contributions of work and result, and the GDP was utilized to evaluate aggregate
expense.
 Monetary experts likewise vigorously depend on the idea of GNP to comprehend
how much cash a country's residents cause by and large throughout the span of a
specific time span and how they to spend it. The overall income that the population
got during a certain time period is determined by the GNP. Analogous to GDP, it is
simply meant to be used as a gauge of productivity and is not a valid representation
of the happiness or prosperity of a nation. It doesn't consider any money got by
non-occupants inside the nation's boundaries, rather than gross homegrown result.
Q2. Discuss and explain the macroeconomic effects ‘Covid-19 lockdown’ has had on the
UK economy.
The contagion caused an unexpected reduction, which was quickly trailed by solid
areas. This examination assesses the fundamental parts of the pandemic's monetary
effect as yet and graphically outlines the main monetary issues. In this cutting-edge period,
the pandemic's monetary effects have never been this unavoidable. Specially appointed
estimations show that the Gross domestic product shrank by 9.7% in 2020, which is
equivalent to the decrease in 1921 and is the greatest decay since exact information have
been accessible starting around 1948.
 Amidst this, as purchasers and affiliations had changed during the earlier year, the
corruption was on a very basic level less as far as its breaking point than during the
significant lockout. Indeed, even while the speed of development debilitated in the
course and toward the year's end, a powerful bounce back in the spring of 2021
brought about a sharp ascent in Gross domestic product. The GDP was 0.5% lower
as of October 2021 than it had been preceding the pandemic.
 The UK's GDP was 25% poorer in April 2020, during the critical shutdown time,
than it had been in February, just two months earlier. Following the spring and
5 of 7

summer of 2020, financial changes occurred that showed how the economy was
becoming more open. Again, during the pre-everlasting winter, this was trailed by
an expansion in Coronavirus cases and extra lockdowns, which eased back
financial development.
 In essence, 2021 has seen worse repercussions from inflation. The main causes of
this were the increase in energy prices and their unsettling impact on all reserve
networks. Due to excessive inflation rates, families found it difficult to manage their
funds and perhaps maintain track of financial growth. The abrupt financial shock
brought on by the plague may ultimately pass, however the emergency may in any
case have for all time "scarred" the economy. This will bring about a 2% drop in
Gross domestic product levels contrasted with what it would have been without the
flare-up's belongings, according to an OBR measure that was presented in October
2021 (Zheng and et. al., 2022).
 As a conclusion, different financial areas were impacted by the transmission to
fluctuating degrees. Two positive touchpoints that have been particularly hard
damaged are accessibility and diversion. Financial institutions have performed
marginally better in a number of industries.
6 of 7

Reference List
Chalkia, A. and Papageorgiou, A., 2022. The Management of Conferences and Business
Events in Periods of Crisis. The New Digital Paradigm. In
Transcending Borders in
Tourism Through Innovation and Cultural Heritage (pp. 463-473). Springer, Cham.
Correa, C.C. and Ferreira, J.J., 2022. What does 40 years of regional and business
competitiveness in tourism research reveal?.
Management Research Review.
Fernandez, V., 2022. Environmental management: Implications for business performance,
innovation, and financing.
Technological Forecasting and Social Change,
182,
p.121797.
Kohtamäki, M., and et. al., 2022. Managing digital servitization toward smart solutions:
Framing the connections between technologies, business models, and ecosystems.
Industrial Marketing Management,
105, pp.253-267.
Méndez‐León, E., Reyes‐Carrillo, T. and Díaz‐Pichardo, R., 2022. Towards a holistic
framework for sustainable value analysis in business models: A tool for sustainable
development.
Business Strategy and the Environment,
31(1), pp.15-31.
Nayal, K., and et. al., 2022. Supply chain firm performance in circular economy and digital
era to achieve sustainable development goals.
Business Strategy and the
Environment,
31(3), pp.1058-1073.
Yassiva, V.V., Priyono, A. and Wibowo, W.P., 2022. Domain-based ambidexterity for
managing a dual business model in the hospitality industry in the midst of COVID-
19 pandemic: an exploratory study.
Journal of Asia Business Studies, (ahead-of-
print).
Zheng, B., and et. al., 2022. Impacts of logistics service quality and energy service of
Business to Consumer (B2C) online retailing on customer loyalty in a circular
economy.
Sustainable Energy Technologies and Assessments,
52, p.102333.
7 of 7