BSC (Hons) Business Management: Business Environment Exam, BMP4003

This document provides comprehensive solutions to the Business Environment exam (BMP4003) for the BSC (Hons) Business Management program, Semester 2, 2021/22. It addresses key topics including the impact of the Monetary Policy Committee (MPC) on inflation, government strategies to promote economic growth, the effects of decreasing interest rates, types of unemployment, and the effectiveness of fiscal policy. The document also delves into sustainable economic growth, analyzing different methods of measuring it, such as GDP and GNP. Furthermore, it examines the impact of international trade, specifically the UK's trade dynamics after leaving the EU, focusing on its effects on consumers and businesses. The solutions are well-structured, providing clear explanations and examples to facilitate understanding of complex business environment concepts.

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
ID Number
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.]
1) Briefly describe and explain how the Monetary Policy Committee (MPC) impact the
inflation rate?
The nation's interest rate standards are established by the monetary policy committee. The country's
central bank governor is the chairman of this committee, which was formed by the national
government. The rate, such as the short term rate that causes inflation, must be fixed by the
monetary policy committee. The committee establishes the repo rate, which is crucial for achieving

the inflation objective (Yusdiansyah, 2022). The goal of the inflation rate is to be reached annually,
and the banking policy that does this is known as the inflation target. The fundamental objective of
the monetary policy committee is to fix the interest rates in a way that prevents further increases in
commodity prices. The most significant impact that the monetary policy committee can have on the
inflation rate is through effective rate management and the control of inflation. Members of this
committee make the crucial choices regarding the establishment of repo rates and statutory rates.
These individuals include the three deputy governors and other top authorities.
2) What can a government do to promote economic growth? Use examples to illustrate your
points
One of the frequent ways for a government to stimulate economic growth is by maintaining a
balance between policies that address the supply and demand sides of the economy. The four main
areas of land, labour, capital, and entrepreneurship are what the government concentrates on in
order to encourage economic growth. Below is a discussion of their creation and use:
 Land- A land not only relates to natural resources but also has worth in terms of commercial
real estate. Therefore, possessing a piece of land has two advantages, it increases the value
of real estate and it has renewable resources. To conserve the woods, the government puts
policies into place (Tesmanto, and Rina, 2022)
 Labour- They are accountable for producing both commodities and services. These people
include staff members, supervisors, salespeople, engineers, and many others. Innovation is
brought to the nation by having a smart and hardworking workforce. The government offers
a range of training programmes to support their development.
 Capital- It is crucial for businesses to have adequate cash to spend and engage in profitable
ventures in order to strengthen the economy. The government makes improvements to
manufacturing facilities and machinery to speed up output and raise money..
 Entrepreneurship- This is the driving force behind all forms of innovation in the
manufacturing industry. The components that are combined by the business owners to
develop, create, and deliver the goods and services These are an essential component of the
industrial process. For the purpose of fostering national innovation, the government supports
new entrepreneurs' business plans.
3) Identify and briefly explain the main effects of decreasing interest rate on the economy?
With lower interest rates, borrowing money is more affordable. The purchasers' increased spending
and investment in the assets as a result of the lower borrowing rates has increased the value of those
assets(Richter, and Hauff, 2022). Reduced interest rates affect the economy both favourably and
unfavourably, as will be shown below:
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Positive impact- Customers are able to spend more money since they are paying less interest,
which boosts the economy as a whole. They offered them the ability in order to acquire equipment
at low cost, which benefits both businesses as well as farmers.
Negative impact- The adverse effect of falling interest rates is that foreign investors receive poorer
returns on their investments in our nation. In addition to this, As a result of the decreased profits,
domestic currency demand declines and exchange rates decline.
4) Briefly explain discuss the different types of unemployment and the different methods
used to measure it them.
The four major types of unemployment are discussed below:
 Frictional unemployment- Moving workers from one location to another is what causes the
temporary unemployment.
 structural unemployment- This kind of unemployment is brought on by a discrepancy
between the needs of the workforce and the kinds of jobs that are offered in the labour
market. The qualifications weren't appropriate for the position that was open.
 cyclical unemployment- The economy is experiencing a decline in demand, which results
in a lack of demand for
 Seasonal unemployment- As a result of the availability of different industries and labour
during the various seasons, this occurs.
Direct approaches, such as direct counting and estimation of the number of jobless persons in the
nation, are among the measurement techniques that can be used to evaluate unemployment (Nayal,
and et.al., 2022). Another approach uses an indirect formula that calculates the amount of
unemployment over a given length of time by reducing it.
5) Explain the effectiveness of the fiscal policy in economics.
To enable the attainment of specific economic objectives, fiscal policy supports the
economy's growth rate. Price stability: It manages the nation's price level, allowing for the
regulation of prices when inflation becomes unmanageable. In order to have an impact on the larger
economy, the government must modify its expenditure and revenue through the use of fiscal policy.
The short-term economic activity of the economy can be changed by the government by modifying
its level of spending and tax income. Because it has the power to impact the overall quantity of
output produced that is, the gross domestic product fiscal policy is a crucial tool for controlling the
economy. An increase in demand for products and services is the first effect of a fiscal expansion..
Due to the increased demand, both output and prices have increased.
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Section B
[Answer any two questions from section B, all questions are worth equal marks (25x2=50
marks). For each question, use separate heading such as “Answer to the Question no. 1”
or “Answer to the Question no. 2” etc.]
1. Explain how an economy can achieve sustainable economic growth and analyse the
different methods of measuring economic growth?
The phrase "sustainable economic growth" refers to a broader concept, which is defined as a growth
rate that is maintained without endangering the people of the developing world with additional
significant economic issues. It considers the desires and requirements of people while also
protecting the environment for future generations and the natural resources. Production of
commodities and services for the economy as well as provision of services to meet human needs are
both included in economic growth. Furthermore, economic development aims to protect natural
resources for coming generations. Sustainable economic growth also refers to the rate of expansion
that should not place undue pressure on the costs of goods and services or result in the depletion of
natural resources (Foster, and Richardson, 2022). This involves taking into account a number of
factors-
 Human resource exploitation and depletion are the leading causes of environmental damage.
 If an ecosystem were to be destroyed, it would mean that humanity as a whole would perish.
Improvements in technology, labour force expansion, and human capital growth are some ways to
promote economic growth in an economy where the amount of capital goods increases. There are
many ways to evaluate economic development, including.
1. Gross domestic product- It gauges expenditure growth or monetary economic growth. Using
the steel business as an example, productivity of output can be measured by tracking the
dollar value of all steel over a specific time period. However, there are a number of
statistical issues with this approach. To demonstrate the value of technological and
organisational innovation. to demonstrate how innovative organisational and technical
practises contribute. It has been discovered that using resources more effectively is what
makes an economy more productive, not the flow of money through it. The link between
resource inputs and overall economic outputs must be maintained, one might say. A nation's
GDP, or Gross domestic product, is the complete financial or market worth of the assembly
of labor and products created inside that nation's boundaries during a predefined timeframe.
Gross domestic product is typically determined every year, except it tends to be determined
per quarter too. Balance of exchange is a key component the Gross domestic product
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equation. At the point when a nation offers more homegrown items to unfamiliar countries
than it purchases, its Gross domestic product increments. At the point when it purchases a
larger number of items from far off countries than it sells (called an import/export
imbalance), Gross domestic product diminishes It is an abbreviation for GDP. Its yearly
computation permits organizations, financial backers, and policymakers to survey,
conjecture, and plan future monetary choices. It just considers completed items and
administrations while barring their handling and working costs. Nations measure it in their
local monetary forms and in light of variables, including creation, pay, and consumption
2. Gross national product- It is employed to evaluate how much money each person of the
nation earned over the course of a certain length of time and how they used it. It determines
the population's overall income during a specified time period. It does not take into account
revenue earned by foreigners who are not citizens of the nation. It is only connected to
productivity measurement. (Fauzi, and et.al., 2022) This likewise refers to the all out worth
of the relative gathering of labor and products delivered by the people and organizations of a
country, regardless of the area of production. GNP considers the ventures made by the
organizations and residents of the nation, living both inside and outside the country. It
likewise considers the worth of the items created by the ventures of the domestic origin. For
determining GNP, just the last labor and products are thought of. Moderate merchandise are
stayed away from as it stimuluses double counting.
3. UK officially left the EU as of 31st December 2020 to ‘trade internationally’. Discuss
the impact upon consumers and businesses of trading internationally.
 All out exchange products (imports in addition to trades) from non-EU nations
outperformed that from EU nations in Quarter 1 (January to March) 2021 (Chatterjee, Rana,
and Dwivedi, 2022).
 Complete exchange merchandise with EU nations diminished by 23.1% and with non-EU
nations diminished by 0.8% contrasting Quarter 1 2021 and Quarter 1 2018.
 Products to Ireland saw the best proportionate fall of the UK's top sending out accomplices
after the EU progress period
 Imports from Germany have declined since April 2019, corresponding with expanded
vulnerability around EU exit and, later in 2020, the Covid (Coronavirus) pandemic
 The UK has imported a greater number of merchandise from China than from some other
country since Quarter 2 (April to June) 2020
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 The early effect of the pandemic found in Quarter 1 2020 lopsidedly impacted commodities
to the US; diminishes in products to the US in Quarter 1 2021 are lined up with diminishes
seen across non-EU nations.
The advanced with worldwide effect of the Covid (Coronavirus) pandemic, joined with
weakness surrounding the impact of EU exit have added to expanded unpredictability in UK
exchange merchandise across 2020 and into mid 2021. It is challenging to completely untangle the
effect the Covid and EU exit had on UK and global exchange though they are as yet having an
impact (Alwadani, and Ndubisi, 2022). They consequently contrast and 2018 information for
longer-term examinations as the latest time frame in which generally stable exchange designs were
noticed.
Reference List (if Any)
Alwadani, R. and Ndubisi, N.O., 2022. Family business goal, sustainable supply chain
management, and platform economy: a theory-based review & propositions for future
research. International Journal of Logistics Research and Applications, 25(4-5), pp.878-
901.
Chatterjee, S., Rana, N.P. and Dwivedi, Y.K., 2022. Assessing consumers’ co‐production and future
participation on value co‐creation and business benefit: An FPCB model
perspective. Information Systems Frontiers, 24(3), pp.945-964.
Fauzi, T.H., and et.al., 2022. Adaptive strategies of external environmental effects in digital
entrepreneurship in the strategic management perspective. Academic Journal of
Interdisciplinary Studies www. richtmann. org, 9(3), pp.38-45.
Foster, M.J. and Richardson, C., 2022. “Buslish” in East and Southeast Asian business–a role for
continuing education. The International Journal of Information and Learning Technology.
Nayal, K., and et.al., 2022. The impact of sustainable development strategy on sustainable supply
chain firm performance in the digital transformation era. Business Strategy and the
Environment, 31(3), pp.845-859.
Richter, N.F. and Hauff, S., 2022. Necessary conditions in international business research–
Advancing the field with a new perspective on causality and data analysis. Journal of
World Business, 57(5), p.101310.
Tesmanto, J. and Rina, N., 2022. The Effect of the Work Environment on Employee Performance at
Panca Sakti University Bekasi. International Journal Administration Business &
Organization, 3(1), pp.1-6.
Yusdiansyah, E., 2022. Corporate social responsibility based on prophetic law in an effort to bring
about social justice.
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