Business Environment BMP4003 Exam Solutions: Regent College London

This document provides solutions to the Business Environment (BMP4003) exam for Semester 2, 2021/22, at Regent College London. It includes answers to short answer questions covering topics such as the impact of the Monetary Policy Committee on inflation, the effectiveness of fiscal policy, the effects of decreasing interest rates, and the stages of the economic cycle. Additionally, it addresses questions related to the impact of COVID-19 on the UK economy and methods for achieving and measuring sustainable economic growth. Desklib provides this and other solved assignments to aid students in their studies.

BSC (Hons) BUSINESS MANAGEMENT
SEMESTER 2, EXAMINATION 2021/22
BUSINESS ENVIRONMENT
MODULE NO: BMP4003
---------------------------------------------------------------------------------------------------------------
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 10

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.]
3 of 10

SECTION A
Answer 1
Monetary Policy Committee (MPC) impact the inflation rate
It is the committee that is responsible for determining policy repo rate that is very much required to
achieve the inflation rate. Furthermore, the monetary policy is majorly responsible for setting the
benchmarks for overall interest rates. Moreover, it is known that MPC committee are held at least
four times in year so that it is able to publish its decision relating with the meeting. Also, the major
aim of the meeting is maintaining the perspective liquidity management so that it is able to maintain
the transmission of the repo rate that changes on overall financial system. Furthermore, inflation
rate are very important for any country as it keep on fluctuating from time to time and therefore it is
necessary that it is regular measured so that systematic steps could be taken on time (Bansal and
et.al., 2022). Also, higher the inflation rate would impact the business and other activities of country
in the negative manner. Furthermore, Monetary Policy Committee (MPC) role is to maintain the
price stability within the country through monitoring the inflation rate so that proper working could
be assured within the country.
Answer 2
Effectiveness of the fiscal policy in economics.
The major role of the fiscal policy within any country is to maintain the growth through setting
various economic goals that needs to be achieved within the specified time frame. Also, the policy
is very effective in manner that it helps in managing the overall output that has been produced over
the certain time. Moreover, this policy helps in increasing the demand of goods and services within
the economy (Malkawi and Khayrullina, 2021). Also, fiscal policy allows the government to adjust
the spending and revenues to influence the broader economic activities. Furthermore, the
effectiveness of the policy is maintained through the government process of collecting the tax from
the public and then redistributing the same in the form of wealth so that certain activities might be
balanced out in the most effective manner. Thus, through this policy the government would be able
to support the economic activities and determine how many revenues are been required so that
country overall economic system might be able to run smoothly. However, the effectiveness of this
policy is impacted as it cannot be implemented quickly enough to affect the overall business cycle .
Also, the fiscal policy is useful in way as it would help in decreasing the overall tax revenues or
increase in the government spending.
Answer 4
The main effects of decreasing interest rate on the economy
4 of 10

Low rate of interest within the economy is been set by the government so that overall public
and business within the country is able to borrow and spend more quickly. Also, lower rate of
interest would allow the consumers of country to demand more goods and services that is good for
the overall development of the country (Hina and et.al., 2022). Moreover, lower rate encourages
people to borrow more money that could be used to improve the standards of living. Also, it would
encourage the people and business to do more of the investment within the economy so that greater
retunes might be generated within the future. Also, lower interest rate would allow to increase the
sales of the economy as more people would be attracted to purchase the goods that are
manufactured within any country. Moreover, the level of transactions would also be increased
during the certain time frame that will helps in overall development of the country on large scale.
However, the lower interest rates in the economy can create high inflation and liquidity traps which
can nullify the positive effects of low interest rates. It tends to increase the disposable income of the
individual which makes people in the economy more inclined towards shopping behaviour which is
not good sign in the long term as it makes things cheaper to buy and increase the affordability. As
much as the lower interest rates are used for the infusing of the money in the economy they are also
cratering a pressure on exchange rates which are going down in the economy.
Answer 9
The four stages of the ‘Economic Cycle’
An economy overall goes through four vital stage which is called economic cycle. The
economic cycle is also popularly known as business cycle. Such stages are expansion, peak,
contraction and trough. During the expansion, economy faces paid growth where interest rates are
low and production increase in the economy yet the inflation tends to rise and build up. After this
peak stage comes which is when the growth hits maximum capacity and economy goes into
imbalance which neds to be corrected. In the third stage of contraction, economy tends to see fall
where employment rates goes down, growth rates slows and price remains stagnate. In the fourth
and last stage of trough, it is considered to be stage where economy hits its lowest and from this
point its starts to pave its way back towards the growth (Uzunidis, 2021). The factors such as GDP
(gross domestic product), inflation, employment rate, consumer spending and interest rates define
the stage of the economic cycle. These are the significant indicators of the economy. These four
stages may sound very easy to depict, yet they are extremely complex to determine as exact cause
of the economy is very difficult to define.
Section B
Answer to the Question no. 1
5 of 10

UK's economy was severely hit by the Covid-19 led pandemic. In 2020 when Covid-19 hit it
wrecked the economy and country saw downfall which seem impossible to recover from. Each and
every sector remained effected starting from manufacturing to education and tourism industry.
There was not even a single sector which was not affected from the pandemic. Luxurious goods and
industry saw drop in demands and product of necessity faced shortage of supply due to non
production activity. The demand and supply forces of the UK economy were highly disrupted.
Government of the country faced many shortcomings in its healthcare industry in pandemic (Chedid
and et.al., 2020).
Pandemic created political instability in the country due the various shortcomings of the
government which made it impossible for the people in governance to handle the disaster pandemic
caused. Many lives were lost and there seemed no solution which could immediately revive the
economy. Government implemented many strict rules and regulation on trade of goods across
border and travelling of people across border. This was necessary to control the spread of virus yet
it stooped many businesses in the country. Government consumed many of its funds in dealing with
the healthcare shortcomings that it faced difficulty to revive the economy with the infusion of
money in the economy.
Inflation rate was all time high in the County and in 2020 GDP(gross domestic product)
declined by 9.7% which was the lowest since 1921. It has been recorded by the officials that during
the first Blackdown in 2020 GDP was down by 25% which was a severe bad indicator for the state
of economy. The demand for various products were all time and products under the category of
health care and need faced high demand, it wreaked the demand and supply forces in the country.
Rates of labour were high due to inflation (Keogh-Brown and et.al.,2020).
Pandemic resulted in high rates of unemployment in the economy as people were lay off in
mass and it decreased the spending capacity of the individual hence declining per capita income of
the individual. Manufacturing units which needed employees were totally shut down due to
government guidelines. Government's aim was to stop the spread of virus which can minimize the
risk of lives. Many people lost their entire saving in medical expenses and also lost their jobs which
created type financial problem for the individuals. It was recorded that as many as 4.77 million
people lost their jobs.
UK is exported of many products and during pandemic internation trade including export
and import was totally banned which created adverse negative impact on the economy. There was
shortage of many items which UK used to import from other country (Nundy and et.al.,2021). As
there was threat of virus spread which pressurized the government o stop the international
movement of trade. These things heavily affected the established supply chain networks in foreign
6 of 10

as well as domestic country. Manufacturing industry saw downfall and wastage of a lot of resources
which creat5ed huge losses. It contributes to a large part of the GDP and it widely impacted the
economy.
7 of 10

SECTION-B
3) Explaining how an economy can achieve sustainable economic growth and analyse the different
methods of measuring economic growth
Sustainable economic growth is very much required within the economy so that recent
environmental issues might be overcome in most effective manner. Furthermore, the substantiality
within the economy could be gained through following certain practices that are been described as
follows:
Advanced technologies: in the current era there are various advanced technologies that
have come up in the market that help the business and people to avoid the wastage of natural
resources. Also, through use of such technologies the firm would not only able to maximize the
productivity but would also be able to remain sustainable in the long run.
Hiking new opportunities for trade: It is been seen that in the market of the goods is ever-
changing the business should choose those options where more sustainable growth options are
available (Lüdeke‐Freund, Gold and Bocken, 2019). Also, it would not only reduce the dependency
on certain field but would also help in strengthen the economy.
Improving the competitiveness: it is very much required for the current business would be
able to improve the productivity levels through using those tools and equipments that would ensure
higher level of sustainability during the long period. Moreover, sustainable business growth is way
through which maximum outputs could be derived in the end as it would not help business to earn
more revenues but it would also allow the people of any country to consume variety of products in
the most efficient manner.
Furthermore, there are various methods through which the economic growth could be gauge
through using various methods that are been described as follows:
Gross Domestic Product- it is method where through which the actual growth of the
economy could be evaluated in the most effective manner (Szelągowski and Berniak‐Woźny, 2022).
Also, this method helps in providing the deeper insights about different segments and way they are
adding their contribution to the economy.
Net domestic product: It is method that helps in analysing the net value added to the
economy and thus it helps in analysing that how the economy is going during the specified time
period.
Growth rate: This the element that helps in identifying the overall the growth the economy
through comparing and measuring the changes from one period to another. Also, it is usually
8 of 10

expressed in terms of percentage. Thus, this would help the country in measuring increase in the
value of investment or revenues stream in the given particular year
CPI- It is known as the consumer price index and thus it helps to know how consumer
prices are going within the economy (Pulyaeva and et.al., 2019). Also, this method is useful as it
would help in generating the better ideas due to greater coverage and having the ability to drive
more perfect outcomes within the short span. Moreover, this is calculated using the base years that
is been used as benchmark that helps in ensuring better comparison and evaluation to any country..
Purchase Power Parity- It is method is also being used by many of economists since it
gives them idea of the way customers are being empowered in certain economy. Also, this concepts
means that cost of goods within the country will remain same even if the currencies are been
exchanged. Furthermore, Purchase Power Parity between the two countries represents the
equilibrium exchange rate and anything above or below would mean that currency is either
undervalued or overvalued.
Thus, it can be said that overall sustainability could be increased in terms when real output
increases over time (De Angelis, 2021). Moreover, the sustainability is achieved over the long
period and it is not achieved through one time efforts. Furthermore, it is responsibility of each
member that responsibilities are understood in the best manner and further they try to influence the
same to other people that are unaware of the practices that could be used to enhance the
sustainability within the economy during the certain point of time.
9 of 10

Reference List (if Any)
Bansal, S. and et.al., 2022. Attaining circular economy through business sustainability approach:
An integrative review and research agenda. Journal of Public Affairs. 22(1). p.e2319.
Chedid, Y. and et.al., 2020. What about BAME? A letter to the editor on'The socio-economic
implications of the coronavirus pandemic (COVID-19): A review'. International Journal of
Surgery (London, England). 81. p.105.
De Angelis, R., 2021. Circular economy and paradox theory: A business model perspective. Journal
of Cleaner Production. 285. p.124823.
Hina, M. and et.al., 2022. Drivers and barriers of circular economy business models: Where we are
now, and where we are heading. Journal of Cleaner Production. 333. p.130049.
Keogh-Brown, M. R. and et.al.,2020. The impact of Covid-19, associated behaviours and policies
on the UK economy: A computable general equilibrium model. SSM-population health.
12. p.100651.
Lüdeke‐Freund, F., Gold, S. and Bocken, N. M., 2019. A review and typology of circular economy
business model patterns. Journal of Industrial Ecology. 23(1). pp.36-61.
Malkawi, E. and Khayrullina, M., 2021. Digital human skills form the corporate economy and
business development. Ekonomicko-manazerske spektrum. 15(1). pp.64-74.
Nundy, S. and et.al.,2021. Impact of COVID-19 pandemic on socio-economic, energy-environment
and transport sector globally and sustainable development goal (SDG). Journal of Cleaner
Production. 312. p.127705.
Pulyaeva, V. and et.al., 2019, March. Practical aspects of HR management in digital economy.
In IOP Conference Series: Materials Science and Engineering (Vol. 497, No. 1, p. 012085). IOP
Publishing.
Szelągowski, M. and Berniak‐Woźny, J., 2022. The changing nature of the business processes in
the knowledge economy–action research. Knowledge and Process Management. 29(2). pp.162-
175.
Uzunidis, D., 2021. Cycles–The Long Cycles of the Economy and the Question of Innovation.
Innovation Economics, Engineering and Management Handbook 1: Main Themes, pp.107-
114.
10 of 10