BMP4003 Business Environment Exam Paper 2022/22

This is the BMP4003 Business Environment Exam Paper 2022/22 for BSC (Hons) Business Management Semester 2. The exam paper consists of two sections, A and B. Section A has 10 short answer questions, out of which 5 need to be answered. Section B has 2 questions, out of which any 2 need to be answered. The questions cover topics such as fiscal policy, economic growth, unemployment, Covid-19 lockdown effects, and circular flow of income.

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
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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
[There are 10 ‘short answer’ questions, you need to answer only 5 of them. You can
choose any 5 questions out of these 10 questions. All questions are worth equal marks
(10x5=50 marks). For each question, use separate heading such as “Answer to the
Question no. 1” or “Answer to the Question no. 2” etc.]
Answer to the Question no.2
The effectiveness of the fiscal policy in economics
The ability to influence the overall amount of output produced makes fiscal policy one of
the most useful tools for managing the economy. It can also be said that government make

use of spending and taxing power in relation to promote the level of stable and sustainable
growth. The fiscal policy is used by government in order to promote sustainable growth
and also to reduce the level of poverty. Fiscal policy and monetary policy are the main
tools which are available for the policy makers and it creates a major impact on the
economy. As the level of money supply is affected by the changes in the interest rates,
bank reserve requirements and the process of buying or selling government securities.
Tax rates and types, expenditure amounts and types, and borrowing amounts and types
are all ways that governments modify the economy (Hansen, 2018). When the revenue
exceeds the level of spending like when the government budget is in surplus then the
fiscal policy is said to be tight or contractionary and loose or expansionary. Moreover, the
change in the deficit is the main issue instead of its size. The increase in consumer
demand for the goods and services is the primary outcome of the fiscal growth. As a result
of the growing demand during that process, both production and prices rise. Demand
growth leads to affect the output and pricing to varying degrees depending on the stage of
the business cycle (Wen, Lee, and Zhou, 2022).
Answer to the Question no.3
A government can promote economic growth
There are various ways which are used by the government in relation to promote the level
of economic growth. For example, the government can boost the economy of the nation
with the help of increasing the level of public investment in the capital goods. It will
increase demand of goods and services which directly elevate the GDP of the nation. In
relation to that the government give the legal and social framework in the economy.
Moreover, innovation is also used in order to promote economic growth as it brings many
jobs and opportunities (Wang and Zhang, 2020). Along with it, brilliant ideas, new ways
and better customer satisfaction will be brought in the country. That is why encouragement
of entrepreneurship and creativity has aided in the development of the nation. It is crucial
to implement the national policies with the aim of that supporting innovation. So that
prosperity last into the next generation and mainly in the time of economic crisis. Due to
Covid-19, the lives of people and economy got affected adversely. Also, in many countries,
the poor, young people, and women have been disproportionately affected due to job
losses and other challenges (Liang and Yang, 2019). This highlights the necessity of fair
economic development strategies that create social stability and reduce social inequalities.
Answer to the Question no.8
Different types of unemployment and the different methods used to measure it them-
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The term unemployment is defined as the term referring to the individuals who are looking
for work and considered to be employable (Zuelke and et.al.,2018). Unemployment is the
main indicator in the health of nation’s economy and it is expressed as the employment
rate. There are different type of unemployment which are explained below-
 Demand deficient unemployment- It is one of the main reasons for
unemployment that takes place during recession. When a company's product or
service demand declines then they often respond by cutting production, which
involves personnel reductions. In actuality, workers are fired.
 Frictional unemployment-It is also known as search unemployment which takes
place when the workers lose the current job. They are in the process of finding new
job and also this suggests that since there will always be some people looking for
work. So, there can never be a moment when unemployment is zero.
The unemployment rate is defined as the share of jobless people in the labour force.
Thus, knowing who is employed is essential for determining the unemployment rate.
People who are either employed or jobless make up the labour force. Making practical
decisions, such how much paid work someone must perform to be deemed to have a job,
is necessary to determine who is employed or jobless. And to actually count the number of
persons who are employed or unemployed. There are several methods for counting or
directly measuring the number of jobless people, which is how unemployment is
measured. The indirect approach to assessing the decline in labour force participation at
particular dates.
Answer to the Question no.9
The four stages of the ‘Economic Cycle’
The economic cycle is defined as the fluctuations in the economy in between the growth
and recession (Zhang, Wu and Chen, 2022). There are some elements that is GDP, total
employment rate, interest rate are known to determine the stages in the economic cycle. It
goes through four stages that is expansion, peak, contraction and trough which are
explained below-
 Expansion-The economy is seen to grow at good speed during the expansion. In
that process the interest rates are low.
 Peak-In this stage the growth accelerates at a fastest rate and if any imbalance
which must be addressed.
 Contraction - Growth slows, employment drops, and prices stay the same during
a contraction.
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 Trough- The cycle has reached its trough when the economy hits a low point and
growth begins to pick up.
Answer to the Question no.10
Circular flow of income
Circular flow of income is defined as the economic model which is utilised to outline the
circular movement of money between the firms and households. That is why it is known as
a two-sector economy because it considers both the sector that is firms and household. It
also evaluates the fundamentals of the exchange which support the economy. In
economics, circular flow of income is one of the crucial topics and in the outer loop the flow
of factor services from the households to businesses to households are represented.
While in the inner loop, the flow of goods and services from businesses to households is
displayed. As the money flows from producers to workers and the economy is an endless
circular flow of money in an endless loop (El Meligi and et.al.,2019).
Section B
[Answer any two questions from section B, all questions are worth equal marks (25x2=50
marks). For each question, use separate heading such as “Answer to the Question no. 1”
or “Answer to the Question no. 2” etc.]
Answer to the Question no.1
The macroeconomic effects ‘Covid-19 lockdown’ has had on the UK economy
The pandemic has largely had a significant negative impact on the UK economy, harming
a variety of industries and businesses. Since it is the first and most serious global
emergency to have had an impact on everyone, everywhere. No nation has been able to
escape the epidemic's devastating effects (Boissay and Rungcharoenkitkul, 2020). No
matter how wealthy or poor, how big or populated. The health crisis worsened and turned
into an economic one as the entire globe was moved to act in an effort to preserve lives. A
never-before-seen reduction in economic activity resulted from the record-breaking
extensive lockdowns implemented to fight the illness. As the aviation and tourism industry
contributes a major portion in the growth of the economy. It is the main industry which has
got affected by the pandemic and it can also be said that since the beginning of the
epidemic, these two industries have experienced significant cash flow problems. Whereas
due to pandemic the innovation has brought in this industry such as travel technologies
and contactless boarding. In that process the government has provided various preventive
measures to deal with the wave of Covid-19. In addition to this, the globe is facing
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significant difficulties and changes as a result of COVID-19. Changes in the business
world and the ordinary work procedure are both brought about by it. Many organisations
implemented work from home policies to adapt to the changes and prevent Covid-19
infection from physical contact. The UK government provided some aid to a handful of
businesses (Sanchez Martinez and Christensen, 2022). In relation to the pandemic
politics, businesses established work-from-home rules to lower the risk of illness
transmission. It provided a method for shifting all of the positions that call for regular office
attendance. It is permissible for a maximum of one year in a special economic zone unit,
with the possibility of an extension for units with 50% of all employees. Employees can
now use the time they would have spent commuting for themselves, which gives them
more time to manage their personal and professional life. Household duties can be
integrated into an employee's schedule as well, providing them more time in the evenings
for leisure activities like
Answer to the Question no.3
Economy can achieve sustainable economic growth and analyse the different methods of
measuring economic growth
The pandemic has affected the lives of people and it has led to endanger the global
economy. Economic growth has the target to meet the human needs while taking care of
the environment and also the natural resources mainly for the future generations is called
as the sustainable economic growth (Pradhan and et.al.,2020). As without ecosystem the
economy cannot survive and that is why maintaining these resources in a way that
prevents the level of depletion is necessary. It also ensures their availability for future
generations is sustainable economic growth. Along with it, there are different methods
which are involved in measuring economic growth are explained below-
 Income approach-Under this the total income is generated by all the production
factors inside the economy. It also helps in measuring the income of people
 Expenditure approach-It is the second method which is also known as
expenditure method and it is opposite of the above-mentioned approach that is
income approach. It starts with the money spent on the goods or services instead of
income.
 Output approach- It helps in measuring the value of the goods and services in
order to generate the income. The output method is also used in order to determine
the monetary or market worth of all products and services produced inside a
nation's borders.
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There are various benefits of the economic growth in the market such as –
 When the economic growth is higher than it will tend to elevate the level of output of
the firm (Ramosa and et.al.,2019). Due to which there will be less unemployment
which is directly related to less government expenditure on benefits and less social
problems.
 People’s standard of living will rise as economic growth will support in the process
of reducing the poverty with the help of increasing people’s income. This will allow
them to have basic necessities.
Reference List (if Any)
Books and Journal
Boissay, F. and Rungcharoenkitkul, P., 2020. Macroeconomic effects of Covid-19: an
early review (No. 7). Bank for International Settlements.
El Meligi, A.K., Ciaschini, M., Ali Khan, Y., Pretaroli, R., Severini, F. and Socci, C., 2019.
The inoperability extended multisectoral model and the role of income distribution: A UK
case study. Review of Income and Wealth, 65(3), pp.617-631.
Hansen, A.H., 2018. Monetary theory and fiscal policy. Pickle Partners Publishing.
Liang, W. and Yang, M., 2019. Urbanization, economic growth and environmental
pollution: Evidence from China. Sustainable Computing: Informatics and Systems, 21,
pp.1-9.
Pradhan, R.P., Arvin, M.B., Nair, M. and Bennett, S.E., 2020. Sustainable economic
growth in the European Union: The role of ICT, venture capital, and innovation. Review of
Financial Economics, 38(1), pp.34-62.
Ramos, C., García, A.S., Moreno, B. and Díaz, G., 2019. Small-scale renewable power
technologies are an alternative to reach a sustainable economic growth: evidence from
Spain. Energy, 167, pp.13-25.
Sanchez Martinez, M. and Christensen, M., 2022. Medium-to-long term macroeconomic
effects of the COVID crisis: An investigation with RHOMOLO (No. 2022-11). Joint
Research Centre (Seville site).
Wang, Q. and Zhang, F., 2020. Does increasing investment in research and development
promote economic growth decoupling from carbon emission growth? An empirical analysis
of BRICS countries. Journal of Cleaner Production, 252, p.119853.
Wen, H., Lee, C.C. and Zhou, F., 2022. How does fiscal policy uncertainty affect corporate
innovation investment? Evidence from China's new energy industry. Energy
Economics, 105, p.105767.
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Zhang, Q., Wu, X. and Chen, Y., 2022. Is economic crisis an opportunity for realizing the
low-carbon transition? A simulation study on the interaction between economic cycle and
energy regulation policy. Energy Policy, 168, p.113114.
Zuelke, A.E., Luck, T., Schroeter, M.L., Witte, A.V., Hinz, A., Engel, C., Enzenbach, C.,
Zachariae, S., Loeffler, M., Thiery, J. and Villringer, A., 2018. The association between
unemployment and depression–results from the population-based LIFE-adult-
study. Journal of affective disorders, 235, pp.399-406.
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