Business Environment Module BMP4003 Exam Paper - University of Bolton

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
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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.]
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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