BMP4003 Business Environment Exam Paper 2022/22

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
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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.
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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.
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