BSC Business Management Semester 2, Business Environment Exam

This assignment provides comprehensive solutions to the BSC (Hons) Business Management Semester 2 Business Environment exam. It delves into the effectiveness of fiscal policy, analyzing its impact on economic structures and aggregate demand, and also examines the influence of income tax on aggregate demand and supply. The assignment further discusses supply-side policies for reducing unemployment, detailing various types of unemployment and measurement methods. It also explores the stages of the economic cycle, explaining how an economy can achieve sustainable economic growth and methods for measuring it. Finally, it compares and contrasts monopoly and perfect competition market structures, evaluating their desirability. The solutions cover key economic concepts and theories, providing a detailed analysis of each question.

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
---------------------------------------------------------------------------------------------------------------
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

2 of 8

Section A
1. Explain the effectiveness of fiscal policy in economic.
Numbers of different theories can be used by the government for the successful
implementation of the fiscal policy. Being an effective instrument that is able to have
the right effect on the work structure and can make it possible to do the various
changes in the offerings which such as demands and supply of the product and
services. Fiscal policy can create a systematic improvement in the outputs which are
manufactured by the business industry which is also known as the gross domestic
product. If the revenue generation in the country is relatively in comparison to the
amount which is invested, then the fiscal policy is known in the state of contract
manner (Opoku, and Yan, 2019). Fiscal policy is subjected to modify the arrangement
of aggregate demand to support the growth of economy in the nation. Moreover, fiscal
policy also influences the other elements such as exchange rates and balance of trade
in the economy as it governs the transactional unit of the business firm. During the
period fiscal development government can increase the rate of interest and which will
work in grabbing the more borrowings in the form of the foreign exchanges. In this
several types of benefits which a nation can observe with proper formation of fiscal
policies that will stimulate the different types of economic frameworks and focuses on
the betterment of the overall gross domestic product. It will also generate the required
stability in the country by proper allotment of the rates in the numerous financial
working of the government.
2. How would an increase in income tax influence the aggregate demand and
the aggregate supply in the economy? Use examples to illustrate your
answer.
The term income tax is explained as the portion of income which is being shared by
the individual to the government, in order to handle the different working and
infrastructure in the nation (Mosca, 2018). The tax can influence the demand and
supply of the country as a whole. When there is increment in the income tax then it
may lead to the low demand of the product as consumers have less disposable income
with them and they focus on spending less money to purchase the goods and services.
By this, suppliers will also decline the overall production which may adversely impact
the supply of the product. But if there is low rate of income tax then it reduces the
3 of 8

sharing amount of the income to the government which will give them opportunity to
pay the value for the product and services which they want to purchase.
3. Discuss the three main supply- side policies that the government can use to
reduce the unemployment.
The complex situation of unemployment in economy can be resolved by the
government by considering few policies which are discussed below-
 Better education and skill development courses- Knowledge is the main source
that will strengthen the work skills of the person (M Abdalla, and Carabias, 2022).
Government can work in this direction, by reducing the costs and expenses of the
schooling and other academic programs will help in attaining the informed youth in
the nation.
 Job information- By giving the right piece of advertisement and publication
regarding the job opportunities will helps in informing the people about the vacant
job post. This will encourage them to apply for such roles and improves their
financial situation.
 Training and subsidiaries for the unemployed- The main reason of
unemployment is least trained and support from the government. By providing the
cost-effective training and subsidiaries to them will help in making them ready for
the jobs.
4. Briefly explain the different types of unemployment and the methods used to
measure them.
Different types of unemployment which cab be found in nation are listed below-
 Demand deficient- This kind of unemployment situation arises during the
recession. In this business institution receives low demands for their product and
services which are offered by them.
 Frictional- It is the period where a current employee or some individuals looking for
some job opportunities. It is the less effective stage because it could be recovered
in some period of time (Li, and Yao, 2020).
 Structural- Some fails to get the right position or job roles in the business institution
as it does not match the amount skills possess by them and remains jobless for the
certain period of time.
4 of 8

 Voluntary- When the pay scale or the salary is not enough to give the proper
support to financial needs of the person, then they starts leaving the jobs by their
own choice, which is known as voluntary unemployment.
To solve this issue of unemployment like determining the number of unemployed
youths in the nation by conducting the regular surveys. For example, in United Kingdom
Labour Force Survey is being utilized by the governments to evaluate the situation of
unemployment.
5. Identify and describe the four stages of ‘Economic Cycle’.
 Expansion- The first cycle is related to introduction of new business and operations
in the economy that will promote the idea of profit and revenue generation
(Kassouri, Alola, and Savaş, 2021). This phase helps in identifying those
opportunities through which a nation can works in adopting distinct policies that will
guide them in making the effective growth.
 Peak- This is the second stage which is often comes after the expansion and in this
country will reach at that point where there is maximum profit earning. But on the
other there is some adverse impact of peak growth on the nation as it creates
several irregularities in the economic framework of the nation and it is the duty of
the government to resolve them.
 Contraction- It is the period where the improvement begins and with there are
distinct things which are faced by the government in respect to low employment,
less growth and deteriorate prices.
 Trough- When the economy of the nation comes to its lowest phase, then it is
termed as trough. It is connected with the recovery face where a country focuses on
maintaining the better policies (Zielińska, 2019).
Section B
1. Explain how an economy can achieve sustainable economic growth and
analyze the different methods of measuring economic growth.
The concept of sustainable economic growth is connected to the fulfilment of basic
needs and wants of the consumers, while focusing on the safety of natural surrounding
and environment. It is because government of the nation does not want to face nay kind of
complexities in the external natural environment, which will hamper the availability of the
5 of 8

resources for the future generation. A wide range of natural components which are utilized
by the government of the country. So, it is their duty to make sure that these factors must
be utilized in such a manner that will no wastage and overuse. In addition to this, it should
ensure the productivity in the nation. Elements like land, labor, capital, natural resources
are such tools which ensure the optimum sustainability and also supports in the growth of
the nation. Government can take help of real GDP to find out the growth of the economy.
Some of measure which are followed by the government in order to maintain and measure
the economic growth-
 Quarterly growth at an annual rate- If there is positive growth in rate of GDP for
the different quarters of the year, then it will indicate the good sign for the
successful rise in the economic structure of the nation (Kassouri, and Altıntaş,
2021).
 The four quarter or year over year growth rate- By examining the overall growth
in relation to the all for four distinct quarters of the year on the regular basis will also
help in achieving the information in respect to the economic situation.
 The annual average growth rate- Government can also include the estimation of
the average for the GDP rate of the country. If it shows the better result then it will
represent the stimulation in the economy.
2. Monopoly and perfect competition are two market structure at the opposite
end of the two spectrums. Compare and contrast the two structures to
influence our view of which structure is most desirable.
About monopoly- There are various forms of market framework is available in the
economy of the country, in this one is Monopoly which is about the alone or single
seller of the particular goods and services in the market. This type of market structure
gives some set of power to the seller where he has all control over, he prevailing
condition in the market. A monopolist has the capability to switch condition of the
market as per the requirement for the personal growth of the business which is running
in the monopoly market. In such market condition the amount competitors is quite less
which is a very good sign for that particular person who is considered as the
monopolist and with this he can resist the entry of new business institution. This is
because he must be offer something unique product whose characteristics are quite
tough to imitate by the other business organisation. The restriction regarding the new
entry could be associated with the formulation of some economic and legal policies, or
6 of 8

might be few institutional or artificial guidelines. The main thing which separates the
working of the monopoly form other market framework is that it has no substitute for all
the set of products and services which they are offering to their consumers. Generally,
the goods which are presented by the monopolist is termed as the symbol of status and
purchase by those people who have good source of income generation
About perfect competition- When there is large number of sellers who are dealing in
the same type of product and issue the same value to consumer, then that situation of
market is considered as the perfect competition. In this, sellers offer same type of
products which have no distinct attributes and due to this, buyers get the various
options to purchase them. The set of goods and services in the perfect competition is
of homogenous in nature which creates the same pricing strategy for all the dealers
who are operating their business in this market. Although there are numbers of sellers
present in this market, but still consumers are aware of all types of condition and
situation which are prevailing. They are completely known about the quality and
product price which are presented in front of them. The main aim of the sellers in the
perfect competition is earn a minimal amount of profit by setting up the affordable
prices which could be afforded by the consumers who belong to different sections of
income. There is less control of any individual on the prices due to some distinct
reasons. If the increase the value of the product and attain extra profit, then new
business firm tries to enter in this market and will obstruct the profit earning of the old
seller in the perfect competition (BUTOV, and BUDNIKOVA, 2022).
The monopoly form of the market will be the most suitable structure as in this
seller mainly focuses on the quality of the product and with the help of legal formalities,
a monopolist can stop other to influence their profit earning. Furthermore, such market
framework always try to present some new and innovative products in the market
which will assist them to grab the attention of the consumers in the market. Products
and services which exist in the monopoly form of the market could be used as the
status of symbol, and for this people could be seen to purchase these products more
frequently. So, monopoly is the most effective form of market framework as it will
support in the better growth of economy too.
7 of 8

Reference List
BUTOV, A.A. and BUDNIKOVA, A.S., 2022. FEATURES AND SIGNS OF THE
MONOPOLISTIC COMPETITION MARKET. In Школа молодых новаторов (pp.
13-14).
Kassouri, Y. and Altıntaş, H., 2021. Cyclical drivers of fiscal policy in sub-Saharan Africa:
new insights from the time-varying heterogeneity approach. Economic Analysis and
Policy, 70, pp.51-67.
Kassouri, Y., Alola, A.A. and Savaş, S., 2021. The dynamics of material consumption in
phases of the economic cycle for selected emerging countries. Resources
Policy, 70, p.101918.
Li, X. and Yao, X., 2020. Can energy supply-side and demand-side policies for energy
saving and emission reduction be synergistic?---A simulated study on China's coal
capacity cut and carbon tax. Energy Policy, 138, p.111232.
M Abdalla, A. and Carabias, J.M., 2022. The Dynamic Effects of Aggregate Demand and
Supply Disturbances on the Aggregate Earnings-Returns Relation. Jose M., The
Dynamic Effects of Aggregate Demand and Supply Disturbances on the Aggregate
Earnings-Returns Relation (March 3, 2022).
Mosca, M., 2018. Monopoly power: competition is never perfect. In Monopoly Power and
Competition (pp. 81-120). Edward Elgar Publishing.
Opoku, E.E.O. and Yan, I.K.M., 2019. Industrialization as driver of sustainable economic
growth in Africa. The Journal of International Trade & Economic
Development, 28(1), pp.30-56.
Zielińska, A., 2019. The analysis of the unemployment structure in the Gostynin county
against the background of the masovian district in years 2014–2017 (Doctoral
dissertation, Kolegium Nauk Ekonomicznych i Społecznych w Płocku).
8 of 8