How Economic Factors Affect Business Activities and Challenges in a Global Economy

How economic factors can
affect business activities and
challenges facing business in a
global economy

Table of Contents
SECTION A.....................................................................................................................................3
Answer 1......................................................................................................................................3
Answer 2......................................................................................................................................3
Answer 4......................................................................................................................................3
Answer 9.....................................................................................................................................4
Answer 7......................................................................................................................................4
SECTION-B.....................................................................................................................................5
1) Discuss and explain the macroeconomic effects ‘Covid-19 lock-down’ has had on the UK
economy-......................................................................................................................................5
3) Explain how an economy can achieve sustainable economic growth and analyse the
different methods of measuring economic growth? ....................................................................6
REFERENCES................................................................................................................................8

SECTION A
Answer 1
Monetary Policy Committee (MPC) impact the inflation rate
Monetary policy committee help for determining policy repo rate in order to required
achievement in order to target on the basis of inflation. Also, monetary policy impact by
persistently in order to attempt for short term in real rates that low will lead eventually higher
inflation and higher nominal interest rates can be impact by no permanent increases in profit as
well as it is based on growth which decreases in unemployment. Also, monetary policy can bne
responsible for fixing the benchmark interest rate (Wolff, Pauling and Baumbach, 2020). Also,
meetings of MPC are held at least four times a year in order to publish its decision after that kind
of meeting. The aim is to maintaining perspective liquidity management in order to facilitate
transmission of repo rate which change on the basis of entire financial system. In fact,
contractionary monetary policy is more popular on the basis of method which is related to the
reducing money supply within an economy in order to increasing interest rates.
Answer 2
The effectiveness of the fiscal policy in economics is help for maintain the growth of economy in
order to certain economic goals which can be achieved. Also, price stability is help to control
price level of country in order to focus more on inflation is too high and price can be regulated
accordingly. The effect of fiscal policy is related to adjust the government in order to spend by
which revenue influences the broader economy. Then on the basis of adjustment the level of
spending tax revenue affect government in order to increase or decreasing economic activity by
short term. That is why fiscal policy is one of the important tool in order to manage in economy
because the ability that affect the total amount of output produced which is said as gross
domestic product. Also, the first impact of fiscal expansion is help for rising the demand of
goods as well as services and greater demand leading for increasing in both output and input.
The effectiveness of fiscal policy that is largely depended on the balance between taxation and
spending.
Answer 4
The main effects of decreasing interest rate on the economy
Low interest rate are supposed to help spur growth and this theory depend on lows rates
will encourage government, consumer and business in order to borrow and spend more freely.