BSC Business Management 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
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.
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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.]
1) Briefly describe and explain how the Monetary Policy Committee (MPC) impact the
inflation rate?
The nation's interest rate standards are established by the monetary policy committee. The country's
central bank governor is the chairman of this committee, which was formed by the national
government. The rate, such as the short term rate that causes inflation, must be fixed by the
monetary policy committee. The committee establishes the repo rate, which is crucial for achieving

the inflation objective (Yusdiansyah, 2022). The goal of the inflation rate is to be reached annually,
and the banking policy that does this is known as the inflation target. The fundamental objective of
the monetary policy committee is to fix the interest rates in a way that prevents further increases in
commodity prices. The most significant impact that the monetary policy committee can have on the
inflation rate is through effective rate management and the control of inflation. Members of this
committee make the crucial choices regarding the establishment of repo rates and statutory rates.
These individuals include the three deputy governors and other top authorities.
2) What can a government do to promote economic growth? Use examples to illustrate your
points
One of the frequent ways for a government to stimulate economic growth is by maintaining a
balance between policies that address the supply and demand sides of the economy. The four main
areas of land, labour, capital, and entrepreneurship are what the government concentrates on in
order to encourage economic growth. Below is a discussion of their creation and use:
 Land- A land not only relates to natural resources but also has worth in terms of commercial
real estate. Therefore, possessing a piece of land has two advantages, it increases the value
of real estate and it has renewable resources. To conserve the woods, the government puts
policies into place (Tesmanto, and Rina, 2022)
 Labour- They are accountable for producing both commodities and services. These people
include staff members, supervisors, salespeople, engineers, and many others. Innovation is
brought to the nation by having a smart and hardworking workforce. The government offers
a range of training programmes to support their development.
 Capital- It is crucial for businesses to have adequate cash to spend and engage in profitable
ventures in order to strengthen the economy. The government makes improvements to
manufacturing facilities and machinery to speed up output and raise money..
 Entrepreneurship- This is the driving force behind all forms of innovation in the
manufacturing industry. The components that are combined by the business owners to
develop, create, and deliver the goods and services These are an essential component of the
industrial process. For the purpose of fostering national innovation, the government supports
new entrepreneurs' business plans.
3) Identify and briefly explain the main effects of decreasing interest rate on the economy?
With lower interest rates, borrowing money is more affordable. The purchasers' increased spending
and investment in the assets as a result of the lower borrowing rates has increased the value of those
assets(Richter, and Hauff, 2022). Reduced interest rates affect the economy both favourably and
unfavourably, as will be shown below:
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Positive impact- Customers are able to spend more money since they are paying less interest,
which boosts the economy as a whole. They offered them the ability in order to acquire equipment
at low cost, which benefits both businesses as well as farmers.
Negative impact- The adverse effect of falling interest rates is that foreign investors receive poorer
returns on their investments in our nation. In addition to this, As a result of the decreased profits,
domestic currency demand declines and exchange rates decline.
4) Briefly explain discuss the different types of unemployment and the different methods
used to measure it them.
The four major types of unemployment are discussed below:
 Frictional unemployment- Moving workers from one location to another is what causes the
temporary unemployment.
 structural unemployment- This kind of unemployment is brought on by a discrepancy
between the needs of the workforce and the kinds of jobs that are offered in the labour
market. The qualifications weren't appropriate for the position that was open.
 cyclical unemployment- The economy is experiencing a decline in demand, which results
in a lack of demand for
 Seasonal unemployment- As a result of the availability of different industries and labour
during the various seasons, this occurs.
Direct approaches, such as direct counting and estimation of the number of jobless persons in the
nation, are among the measurement techniques that can be used to evaluate unemployment (Nayal,
and et.al., 2022). Another approach uses an indirect formula that calculates the amount of
unemployment over a given length of time by reducing it.
5) Explain the effectiveness of the fiscal policy in economics.
To enable the attainment of specific economic objectives, fiscal policy supports the
economy's growth rate. Price stability: It manages the nation's price level, allowing for the
regulation of prices when inflation becomes unmanageable. In order to have an impact on the larger
economy, the government must modify its expenditure and revenue through the use of fiscal policy.
The short-term economic activity of the economy can be changed by the government by modifying
its level of spending and tax income. Because it has the power to impact the overall quantity of
output produced that is, the gross domestic product fiscal policy is a crucial tool for controlling the
economy. An increase in demand for products and services is the first effect of a fiscal expansion..
Due to the increased demand, both output and prices have increased.
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