Business Environment Module BMP4003 Exam Paper - University of Bolton

This is the Business Environment Module BMP4003 Exam Paper for BSC (Hons) Business Management Semester 2, Examination 2021/22 at Regent College London. The exam paper consists of 10 short answer questions, out of which 5 need to be answered, and 2 long answer questions. The short answer questions cover topics such as monetary policy committee, fiscal policy, effects of decreasing interest rate, types of unemployment, and economic cycle. The long answer questions cover the impact of COVID-19 on the UK economy and the impact of UK leaving EU on businesses and consumers.

University of Bolton
REGENT COLLEGE LONDON
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.]
Question 1: Briefly describe and explain how monetary policy committee impact the
inflation rate?

The monetary policies are those policies that are decided by the largest bank of a
particular country in order to avoid negative impact of inflation and deflation that keep
happening in the country. There are mainly 9 members in the monetary policy committee
of the UK. Their main objective is to stabilize economy on the basis of changing repo rate,
reverse repo rate and various other banks rates. These rates are set according to the
requirement of the country and as per the situation that the country is going through
(Martin and Milas, 2018). The main thing that this policy considers is the rate at which
inflation is increasing in the economy After, seeing that rates are fixed by the committee to
decrease the purchasing power of the people in order to decrease deflation. This time
monetary policy has kept target inflation of 2 per cent means more that 2 per cent inflation
is not good for the country and for decreasing the rates of inflation over that monetary
committee will be deciding the rates according to that. Monetary policy committee
increases repo rate and reverse repo rate to restrict borrowings further, rates at which
bank give loan to the ultimate consumer also increases (Ferrari Masetti, and Ren, 2018).
Question 2: Explain the effectiveness of the fiscal policy in the economics.
The fiscal policies are those policies that are set by the government of the particular
country. The fiscal policy are also defines as the government revenues, collections and the
expenditure that government does for increasing the growth of the country. Fiscal policy
are the key policy that control inflation in the country. Further, these policies are decided
by the government authorities. The adjustments that government does on time to time help
them to curb inflation, it also balances the purchasing power of the people in the economy.
Government spend more when they is economic recession in the country and tries to
control all its investment till the time there is high inflation. The growth of the economy
depends on the fact that how government uses set of policies to grow its GDP. There are
mainly two points under fiscal policy. First is the expansionary and the other is one
deflationary. Depending upon the situation government uses these measures.
Expansionary fiscal policy is about stimulating all the aggregate demand in the economy
by bisting rate of the growth while the deflationary fiscal policy involves reducing aggregate
demand in the economy to avoid inflation in the country and its pressures (Cox and
McCubbins, 2019).
Question 4: Identify and briefly explain the main effects of decreasing the interest rate on
the economy?
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The simple effect of decreasing inflation is that the consumer are able to take more
loans from the banks that help them to spend more in market which also says that their
purchasing power increases with decreasing interest. This encourages businesses to
expand more by investing more into the business and earn higher revenues ultimately
helping economies to grow in the market. The lower interest rate attract consumer in the
market. It has impact such as high liquidity power in the hands of people and the inflation if
interest rates decrease to higher level. This simply is done by the governments where
economies goes into recession and banks are further not willing to pay money to the small
business owners. Covid -19 was one such time where countries reduced its borrowing rate
in the market as there was no money left with the consumer after all the impacts of the
pandemic. The spending was encouraged by the government to come out of the recession
that was the major impact of the covid-19. Decrease in the rate of the inflation simply
increases power of the people to invest more into the business and into the economy to
contribute more towards the GDP of the country.
Question 8. briefly explain the different types of the unemployment and the methods that is
used to measure them.
Unemployment simply means one who is capable of working is not able to find job in
the country. Though, having all the qualifications and the higher degree of knowledge still
he could not find job of his skills. Higher rate of unemployment is never good for the
country as unemployment totally waste knowledge of the individual. There are many types
of unemployment and that are as follows-
1) Structural unemployment- This unemployment occurs because of the fast moving
technology rather than shift in the demand and supply of the economy (Sciacca, 2018).
2) Voluntary unemployment- the voluntary unemployment means where an individual
prefers ti remain at home rather than working in any industry.
3) Frictional unemployment- the friction unemployment is said to be the unemployment of
the particular time until and unless a person finds the right job.
The methods to overcome with the unemployment are that the government should spend
on the programmes that help individual to find the job from where he belongs too, or where
his skill s can be useful. Further, the unemployment rate must be check from different
surveys in different industry in order to find the different measure to overcome with such
problem. Meaure that government can use are as follows-
1. Use of labour-intensive technology in industry sector.
2. Diversification and expansion of the agriculture policies.
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3. Need of national employment policies.
Question 9. Identify and describe the four stages of the ‘Economic Cycle’.
There are mainly four stages involved with the economic cycle of the country;
this four stages are as follows-
Expansion- This stage cover the rapid growth of the particular country. The interest rate,
inflationary rate are lower and this becomes reason behind the increasing productivity of
the country.
Peak- This stage covers the economy growth of the country at that point where the growth
is highest. This need to be correct at the right time else country goes into recession.
Contraction- This is said to be the correction point where growth slows down and prices
becomes stagnate with the employment rate falling in the market.
Trough- the through is that stage of the cycle where economy starts contacting and then
hits lowest point of the growth before coming into the recovery stage where country starts
growing once again.
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.]
Question 1. The UK economy during the corona virus impact badly and it affects the
economy of UK?
Corona was unexpected virus that spread at a rate that all the major economies of the
world went into recession. The hit of covid-19 was so hard that its impact was negative.
Covid-19 leads to condition of the high restrictions by imposing lockdown. The result of
which was the increased rate of the inflation in the country (Richiardi, Bronka, and Collado,
2020). The economy of the UK declined at very faster rate lead to the thousands of people
in unemployment. The rate of gross domestic product at the end of 2019 was in negative.
Further, researchers have shown that the growth the country was so lower that there was
a time in the country with no production and no services. Gross domestic product simply
means the collections of all the goods produced in the country as all the countries went
into lockdown during the period of covid – 19, there was no production at all and the major
impact was Gross domestic product itself. December 2020 was the period of recovering
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stage but that also showed no major change in the GDP of the country ( Mihailov,2020).
Besides, these there are some other impact of covid 19 that are as follows-
 Higher rate of inflation leads to the decreasing purchasing power of the country.
 Unemployment rates increased to the higher level.
 Financial crises become the major problem all over the world.
 The rate of the Gross domestic product went lowest.
 Millions of start-ups closed.
 Enterprises and business faced severe threats.
 The food system and the health system of the country become mismanaged.
The quantitative analysis has shown that because of lockdown restrictions, the growth of
the country when to -9.1% in the months of March 2019 to December 2020. The average
growth in GDP was – 11% during all the months of the restrictions put by the government,
economy went into recessions and it was difficult to come out of this period not only for the
UK but for all over the world as covid-19 faced by all the countries. Besides the impact on
GDP countries also faced severe impact upon the education sector, again the reason was
lockdown. All the schools and universities went shut and online studies become the new
trend which is not sufficient to teach students. These are some of the impacts that the
country has faced, but all the condition that UK faced, financial stability was the major one
that unbalanced country. The finances of country were ending because of the requirement
that the government has to spend on the health sector than any other sector. Recovering
from all this impact will take time, and UK has already started planning about the policies
that will help country to come out of covid-19 disaster.
Question 2. Impact of UK leaving EU on businesses and consumers?
The exit of the UK from the European Union has a significant impact on the overall
business environment of the country as it has led to changes in the policies and
procedures of conducting business practices at an international level. The positive impact
of this exit of the UK shows that now businesses will have less restrictions from the
European Union to operate in the business environment allowing them to conduct free
trade from non-European Union markets. This is further beneficial for the customers as
well to procure their desired products from International markets with less complexity.
There are more opportunities for growth for the businesses to acquire opportunities in
international markets with the help of expansion (Hanushek and Woessmann, 2020).
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Manufacturers can get a better price for their products and services with the help of the
exit of the UK from the EU. This may further provide assistance to the UK businesses to
get the authorized economic operator status which provides them with better support to
move their goods in different countries and gain better advantage successfully. The UK
consumer will be able to purchase premium products from the Outer Markets and satisfy
their needs with the help of this decision of the UK Government.
Brexit also has a negative impact on the economic development of the businesses and
Consumers in the UK as it will increase the tariff on British Exports which has reduced the
profitability of these businesses. Consumers may get the products at higher price points
which may create issues for them in the UK business environment. The supply chain
between UK and EU countries got destructed due to this decision which has created
difficulty for the organizations to gain better advantage and increase their overall
satisfaction level. This further creates delays for the customers to get their desired
products and services which has created inconvenience for them.
The movement of skilled workforce between UK and EU is restricted due to Brexit which
had a negative impact for the businesses to increase their overall productivity. Companies
are unable to generate higher quality of output due to such restrictions which have been
created due to this aspect. This has also reduced opportunities for candidates in the EU to
seek Employment opportunities in the UK which is unfavorable for their professional
growth and the overall economic development of the region (Zafar and et.al., 2019).
Confidence in the UK business environment has decreased due to the UN stability of the
Sterling rate which is a result of Brexit. The demand for UK currency has significantly
decreased in the market and the country has experienced reduction in their economic
growth which is a negative factor in their overall development and enhancement. This
shows that Brexit has impacted the UK business environment positively as well as
negatively and it has shown a major influence on the satisfaction levels of organizations
and consumers. Due to Brexit the international trade has become complex for the UK
businesses which creates difficulty for them to achieve better results.
Reference List (if Any)
Richiardi, M., Bronka, P. and Collado, D., 2020. The economic consequences of COVID-19
lockdown in the UK. an input-output analysis using consensus scenarios. Journal of
Chemical Information and Modeling. 53(9). pp.1689-1699
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Mihailov, A., 2020. Quantifying the Macroeconomic Effects of the COVID 19 Lockdown:
Comparative Simulations of the Estimated GalíSmetsWouters Model. Univ. Read.
Discuss. Pap. 7. pp.1-32.
Martin, C. and Milas, C., 2018. The sub-prime crisis and UK monetary policy. 22nd issue
(September 2010) of the International Journal of Central Banking.
Ferrari, A., Masetti, O. and Ren, J., 2018. Interest rate caps: the theory and the
practice. World Bank Policy Research Working Paper. (8398).
Cox, G.W. and McCubbins, M.D., 2019. Divided control of fiscal policy. In The politics of
divided government (pp. 155-175). Routledge.
Sciacca, F., 2018. Labour market participation and frictional unemployment in stochastic
equilibria (Doctoral dissertation, University of Essex).
Hanushek, E.A. and Woessmann, L., 2020. Education, knowledge capital, and economic
growth. The economics of education, pp.171-182.
Zafar, M.W. and et.al., 2019. From nonrenewable to renewable energy and its impact on
economic growth: the role of research & development expenditures in Asia-Pacific
Economic Cooperation countries. Journal of cleaner production, 212, pp.1166-1178.
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