Business Management Exam: Business Environment, Semester 2, 2021/22

This assignment provides comprehensive answers to a Business Environment exam for the BSC (Hons) Business Management program, focusing on the module BMP4003. The exam covers key macroeconomic concepts, including the effects of decreasing interest rates, the four stages of the economic cycle, and the government's role in influencing the economy through interest rate adjustments and fiscal policies. It delves into supply-side policies to reduce unemployment and the effectiveness of fiscal policy. Section B explores the impact of Brexit on consumers and businesses involved in international trade and analyzes the macroeconomic effects of the COVID-19 lockdown on the UK economy. The answers are supported by relevant academic sources and provide a detailed understanding of the topics.

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
Q1. Identify and briefly explain the main effects of decreasing interest rate on the economy?
Adjustments in the prevailing rate of interest may very well have positive or negative effects
on some of the business sectors. Banking institutions often adjust their goal loan prices in response
to monetary activity, increasing interest rates during periods of economic expansion and
erroneously lowering rates during periods of weak economic growth. Increasing rates lowers the

cost of borrowing money (Al-Shaer and Hussainey, 2022). This encourages customer and business
expenditures and theories and can lower asset costs. However, this can also lead to problems like
extension and liquidity deceptions, which undermine the applicability of interest rates that are close
to the ground. A modification to the interest rate can conceivably have an immediate impact on the
financial markets, but it may take up to a year until there is a noticeable overall impact on the
economy. When customers pay less in revenue, this provides them more money to spend, which can
have a growing influence of extended burning through across the economy in terms of its effect on
the economy's overall purchasers. Additionally, diminished borrowing rates help commercial
ventures and farmers by encouraging them to invest heavily in equipment due to the low acquisition
prices. This is the reason why performance and proficiency are improving.
Q2. Identify and describe the four stages of the ‘Economic Cycle’.
The effects of the monetary cycle suggest that the economy advances between periods of
expansion (improvement) and contraction (slump). When determining the continuous phase of the
financial cycle, factors such as gross domestic product (total national output), credit costs, total
business, and consumer spending can be helpful. The core four phases of the cycle are referred to as
the phases of growth, peak, contraction, and depression (Chang and et. al., 2022). The period of
Expansion comes first in the cycle; during this time, the economy changes direction rather quickly,
credit costs are often low, production rises, and inflationary pressures increase. Then comes the
Crest or Peak. A cycle reaches its pinnacle when development accelerates at its most astounding
rate. Top improvement frequently creates an economic hallmark that needs to be corrected. The
very next stage is the Contraction, which follows the Trough, when the economy reaches a
discouraging point and advancement starts to recover. During the period of contraction,
advancement slows down, business declines, and expenses degenerate.
Q3. To what extent can the government improve economic situation by changing the interest
rate?
The adjustments to the monetary policy may end up serving as a guide for the public
authority in order to combine both relative business expansion and operational changes. Thus, this
tactic is an essential tool for attaining both extension and improvement goals. Customers stop
spending as much as they once did, business creation slows, forcing companies to lay off subject
matter experts and stop investing in new cut-offs, and fresh demand for the nation's goods may also
decline during a downturn. In essence, there is a decreasing in the overall, or aggregate, demand to
which the government might respond with a system that recharges in opposition to the direction the
economy is heading. Another thing that the governing bodies might fundamentally consider is how
best to use the financial strategy. In any event, it frequently takes investment to approve
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adjustments to spending and appraisal, and it is politically challenging to reverse these adjustments
once they become guiding principles (Huang and et. al., 2022). Money-related strategy is generally
seen as the main line of defence in settling the economy during a trough. When added to the worries
that consumers would not respond in the expected manner for the predicted financial lift, this
explanation becomes clear.
Q4. Discuss the three main supply-side policies that the government can use to reduce
unemployment?
The supreme authorities can implement supply-side interventions like providing
development and training opportunities for aspirant youth or they can try unlimited economy game
plans like expanding job market versatility in an effort to try and reduce the extent of
unemployment. The activities may involve setting up improved instruction and preparation facilities
for the teenager. This results in appropriate capacities that will aid the long-unemployed in
retraining and obtaining jobs in a competitive labour market. This may aid in reducing hidden
unemployed labour. However, it depends on the public authority's ability to provide the resources
that organisations actually require; there is no assurance that organisation expenditures will actually
need to fill the capacity gap. In terms of the government-funded subsidies, the public authority
could genuinely use business endowments or work appropriations (Kheng, 2022). The group can
offer presents to businesses who accept long-term unemployment. The overly long-term
unemployed may now have another opportunity. In any case, it will be dramatic, and there is a
chance that businesses will fire present employees in order to reap the rewards of increased profits.
Q5. Explain the effectiveness of the fiscal policy in economics.
The political authority uses budgetary arrangements to modify its expenditure and
compensation in order to have an impact on the global economic system. The governmental entity
can influence the economy by temporarily increasing or decreasing monetary development by
altering its level of use and necessity pay. For instance, when the public power runs a monetary
arrangement setback, it should be participating in fiscal lift, urging money-related activity, and
when the public power runs a monetary arrangement overabundance, being taking part in a fiscal
withdrawal, it is said to move back monetary action. The basic viability of this technique can be
explained similarly to how the public expert would use it to leverage the fiscal lift to encourage
economic growth by increasing government expenditure, lowering obligation pay, or a combination
of the two (Kwok, Watabe and Koh, 2022). Growing government consumption will support
economic growth generally, whether directly by acquiring more goods and services from the
shadow economy or indirectly by distributing resources to people who might later spend the money.
On the other hand, increasing people's discretionary capital would ultimately shorten those people
consuming more work and things. This will indirectly engage monetary development overall.
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SECTION B
Q1. UK officially left the EU as of 31st December 2020 to ‘trade internationally’. Discuss the
impact upon consumers and businesses of trading internationally.
The terms of the UK's methodical withdrawal from the EU, in accordance with Article 50 of the
Settlement of the European Association, are laid forth in the withdrawal of the agreement concluded
between the European Association and the Assembled Realm. A transitional phase lasting from 1
February until 31 December 2020, during which the EU treated the Unified Realm as if it were a
Part State, with the exception of collaboration in the administrative and foundational structures of
the EU. These months were used by the EU and the UK to organise the Collaboration and
Engagement understanding. The loss of permission to the EU's ongoing smoothed-out business
plans and any practises obstructions will have an impact on commerce with non-EU countries,
while associations with central area European suppliers or clients would be affected (Maazouz,
2022). Additionally, it is possible to explain how this significant step will affect trading associations
and buyers generally;
 The exit on rule had the potential to have a huge impact. The UK generally tries to suggest
upon the expansive standards in different places, and given everything, UK rule will
continue to adjust to those standards, but without being able to influence the methodology
behind them. We consider the typical conditions during the transition period.
 As a result, the nation's supply networks could experience delays and increased expenses.
The largest global repository of good planning also provides helpful insight for reviewing
your store layout and creating appropriate overall investment contracts. Affiliations must
understand how they will be impacted by the UK's transition to IP guidelines after leaving
the EU.
 The trial of easing the UK's regulatory framework for the government and parliament will
occur as a result of its departure from the EU. By altering how the law is applied, Brexit has
a rapid impact on associations. Courts should evaluate whether they employ recent decisions
issued in the European Authority Courts as points of view as the cycle integrates modifying
suitable EU guidelines into UK guidelines.
Q2. Discuss and explain the macroeconomic effects ‘Covid-19 lockdown’ has had on the UK
economy.
Areas of strength for a were followed by an acute drop brought on by the pandemic outbreak.
This prepared explores the altered aspects of the financial impact of the pandemic up to this point
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and graphs the key topics of importance from a financial standpoint. In today's world, the
pandemic's impact on the economy is unprecedented in scope. The GDP shrank by 9.7% in 2020,
which is the biggest decline since reliable statistics have been kept since 1948 and is comparable to
the decline in the year 1921 based on ad hoc assessments.
 Despite this, because buyers and associations had changed during the previous year, the
degradation was basically less in terms of its limit than during the significant lockout.
Regardless of the fact that improvement slid back in the middle and end of the year, a robust
recovery in the spring of 2021 prompted a swift return in GDP. Gross domestic GDP was
currently 0.5% lower than it was prior to the epidemic as of October 2021 (Simoni, Schaper
and Nielsen, 2022).
 The UK's GDP was 25% lower in April 2020 than it was only two months earlier in
February throughout the crucial time of lockdown. Money-related developments occurred
after the spring and summer of 2020, which reflected the economy's opening up. Once more,
this was followed by an increase in Covid cases and additional lockdowns during the pre-
everlasting winter, which led to a decline in financial development.
 In actuality, throughout 2021, the impact of inflation has increased. The main causes of this
were the surge of energy costs and the disturbing impact on overall reserve chains. High
rates of inflation will make it difficult for families to manage their finances and potentially
monitor financial advancement. However, when the pandemic's quick financial shock
gradually dissipates, the crisis may cause irreparable harm, or "scarring," to the economy. A
measure from the OBR that was published in October 2021 suggests that this will result in a
2% reduction in the level of GDP compared to what it would have been without the
contagion's effects.
 As a result, different economic sectors were affected by the contagion to varying degrees.
Areas that experience favourable touch, such as accessibility and diversion, have been
particularly hard struck. As far as financial organisations go, a few areas have done
somewhat better.
Reference List
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Al-Shaer, H. and Hussainey, K., 2022. Sustainability reporting beyond the business case and its
impact on sustainability performance: UK evidence. Journal of Environmental
Management, 311, p.114883.
Chang, and et. al., 2022. The bright side of environmental uncertainty for organizational learning:
the moderating role of political skill. Asian Business & Management, pp.1-30.
Huang, H., and et. al., 2022. Assessing the role of financing in sustainable business environment.
Environmental Science and Pollution Research, 29(5), pp.7889-7906.
Kheng, Y.K., 2022. Serene Business Environment Moderated by Competitive Intensity on
Performance of Small and Medium Enterprises (SMEs) in Malaysia. Asian Social Science,
18(9), pp.1-16.
Kwok, A.O., Watabe, M. and Koh, S.G., 2022. COVID-19 and the evolving business environment:
From the lens of three innovation theories. In COVID-19 and the Evolving Business
Environment in Asia (pp. 281-289). Springer, Singapore.
Maazouz, L., 2022. Reshoring process of manufacturing ventures in the UK: an emergent theory
perspective (Doctoral dissertation, University of Wales Trinity Saint David).
Simoni, L., Schaper, S. and Nielsen, C., 2022. Business model disclosures, market values, and
earnings persistence: evidence from the UK. Abacus, 58(1), pp.142-173.
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