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
Question 2....................................................................................................................................3
Question 3....................................................................................................................................3
Question 4....................................................................................................................................3
Question 8....................................................................................................................................4
Question 9....................................................................................................................................4
Section B..........................................................................................................................................5
Question 3: Explaining how an economy can achieve sustainable economic growth and
analyse the different methods of measuring economic growth...................................................5
Question 4: Comparing and Contrasting the monopoly and perfect competition market
structures and commenting which is the most desirable structure..............................................7
REFERENCES................................................................................................................................1

SECTION – A
Question 2
Fiscal policies can be referred to as an influential tool which is used and controlled by the
government to steer and direct the economy in the correct direction. Policies relating to the
government expenditures and its taxation powers are called as fiscal policies. The expenditure
and the collection of the government needs to be balanced to keep the economy stable and going.
The effects of the fiscal policies can be seen directly as well as indirectly on the personal
expenditure influencing, capital expenditure, rates of exchange, deficit levels, interest rates, etc.
Fiscal policies are utilized to influence the expansion of a GDP as well as its contraction
being a measurement of economic growth (Sassi, 2019). These expansion fiscal policies can be
identified in the case when taxes are lowered and the expenditures are increased by the
government. There is an inherent limitation in predicting the economy thus, there will always be
delay in when the such policies are determined to be required and are actually approved to be
implemented.
Question 3
Economic growth of any economy is measured by analysing the increasing GDP (gross
domestic product). GDP is the combined value of all the goods as well as services which are
being produced during a period of 1 year. There are multiple factors which affects the economic
growth of an economy i.e., no single factor is responsible for such growth. Most often, such
economic growth is achieved by increasing the spending by consumers and investments by the
businesses.
Economy also shows the required growth when workers and employees are hired by the
businesses, wages and salaries are raised by the businesses and investments are made in
expansion of their businesses (Karagianni, Pempetzoglou and Saraidaris, 2019). This means that
creation of new job opportunities will always lead to growth of the economy. Other aspects and
activities which leads to economic growth are cutting of taxes, allowing rebates, deregulation of
the strict rules imposed on entities, expenditure and investment on infrastructure which will
eventually enhance the productivity of the businesses.
Question 4
Decreasing rate of interest in the economy will result in borrowings getting cheaper. Such
cheaper borrowing will encourage the people to borrow more and eventually spend and invest