Economics Exam: Exploring Growth, Macroeconomics and Policy Effects

This economics assignment provides solutions to exam questions covering various topics. It begins with an analysis of growth strategies for 'Bargain Bucket' using the Ansoff matrix, focusing on market penetration as an effective approach. The assignment then explores the significance of understanding macroeconomics for organizational planning, highlighting examples like Apple and Coca-Cola. Finally, it discusses the roles of fiscal and monetary policies in determining exchange rates, emphasizing factors like income distribution and governance structures that policymakers must consider. Desklib provides access to similar solved assignments and past papers for students.

Economics exam

Contents
QUESTION 1..................................................................................................................................1
QUESTION 2 ……………………………………………………………………………………..3
QUESTION 3……………………………………………………………………………………5

QUESTION 1
A growth strategy is a deliberate plan or a roadmap for an organisation to overcome current
and future challenges to meet its goals and objectives. Goal strategies enable a firm to
continuously working towards achieving its goals and objectives. Tactics of growth help to boost
the credibility of an organisation. A good growth strategy helps an organisation to increase its
Brand value and create a strong image among customers. It keeps both leaders and employees
focused and enable them to think for long term (Growth strategies for small business, 2022).
Growth strategies for Bargain Bucket is explained with the help of Ansoff matrix which is
effective framework to identify opportunities related to expand revenue and tapping in new
markets. The growth strategies in context to Bargain Bucket are as follows:
 Market Penetration: Market Penetration deals with the increment of sales of existing
products into existing markets, as they are less risky, in relative terms. By using the
strategy, managers of Bargain Bucket can expand by offering their customers some ever
resisting discounts in order to increase their sales.
 Market Development: Market development focuses on selling existing products into
new market, which involve lesser risk, catering the needs of different customer segments.
Through the strategy, Bargain Bucket can expand by opening new outlets in regards to
reach more & more customers, its accessibility to its regular buyers should be increasing,
for better sales.
 Product Development: Its focus lies with the introduction of new products to an existing
market, which will bring more brand loyalty of its customers towards the organisation.
By using the strategy, Bargain Bucket can expand by involving more clothing styles
according to different sizes & shapes which can increase their range of availability
keeping in mind the needs or requirement of different customers.
 Diversification: Concept of diversification involves the arrival of new products into a
whole new market. Along with new styles, Bargain Bucket should involve different
categories and designs to please its regular customers as well as attracting the new ones.
Additionally, the company with the strategy can make their products more accessible and
price ranges more affordable to its customers in order to expand its exposure.
From the above strategies, market penetration strategy is effective growth strategy for
Bargain Bucket for expansion. The strategy will enable the organisation to know size of the
1

potential market. When management of Bargain Bucket uses this strategy they will seek to sell
more existing products into the market to which they are familiar. It will enable them to
communicate with their existing customers. For market penetration strategy the managers of
Bargain Bucket will put more efforts in marketing process or streamline the distribution process,
they can decrease the price of product to attract new customers in the same market segment. The
managers of Bargain Bucket can also acquire a competitor firm in order to expand its business.
Due to aggressive pricing a goodwill will be created among the customers who buys the products
first. The firm will increase its customers on supplying quality products and also Brand value of
the organisation will increase in the market.
REFERENCES
Books and Journals:
Growth strategies for small business. 2022. [Online]. Available through:
https://www.thesmallbusinesssite.co.za/2018/09/03/7-growth-strategies-small-business/
2

QUESTION 2
It is imperative for enterprises to understand the varied aspects of macro economy for
planning their expansion as well as consolidation practices in a strategic manner. It is significant
for organisational managers to have a thorough knowledge about economic cycle which help
them to make informed decisions in an effective manner.
It is considered as beneficial for organisational managers as it aids them in understanding
economic fluctuations. It also helps organisational managers in formulation of economic policies
which assists them in planning for expansion as well as consolidation of their business practices
for generating more profit margins. Through having an understanding of macro economy,
organisational managers can evaluate varied resources as well as capabilities and churn out the
manner which can increase their national income in a strategic manner. It also helps them in
boosting their productivity as well as create job opportunities for unemployed in an effective
manner. Macroeconomics essentially deals with aggregate production as well as increase the
price level in regards with an economy as compared with specified industries and markets.
Macro economy also aid organisational managers in generating valuable insights about the
national income as well as GDP of a specified country. For example, managers of Apple have
gain insights regarding macro economy practices for flourishing their business on a global basis.
Due to their understanding of macro-economic factors such as GDP, inflation, currency
exchange rates, fiscal and monetary policies, they have managed to expand their business
operations in several countries. They not only sell their products on an international level but
also have a large supply chain for production as well as assembly practices (Apple, 2022).
Another example is of Coco Cola whereby its managers understand the macro-economic
principles in a strategic manner which certainly helps them to operate their functions smoothly
on a worldwide basis. Their main focus is on providing the drink by fulfilling demand of massive
customer base in a strategic manner. Managers of Coco Cola have better understanding about the
national income, perspectives of differentiated people hailing from different parts of the world.
This practice has helped them to take right decisions at right time in regards with expansion.
They take care of factors such as labour costs, interest and tax rates in countries where they are
operating or planning to expand their operations. Companies which understand the aspects of
macro economy factors are in a better position to make informed decisions regarding their
expansion plans as well as consolidated practices. For example, organisational managers gain
3

information regarding political stability of a specified country by analysing its interest and tax
rates. Through this they develop their understanding how economy is regulated and stability can
be maintained in a strategic manner. Increasing population in a particular country also led
establishments to enter into international market for prospering their business activities in an
effective manner. It also aids organisational managers in making rational decision in accordance
with economic development.
REFERENCES
Books and Journals:
Apple, 2022. [Online]. Available through: <https://www.apple.com/business/
4

QUESTION 3
Policies are the course of principle which helps to promote efficiency in all kinds of
activities. Fiscal policy and monetary policy are two principles that helps a country to measure
and control their cash flows. Fiscal policy is a governmental tool to handle their spending and
taxation for influencing the economic growth whereas monetary policy are strategies framed by
government to control mediums and quantity of financial instruments presented in an economy.
The price of any country's money in comparison to another country is considered as exchange
rates. Fiscal policy and monetary policy, both have direct and indirect plays significant role in
determining exchange rates in the economy. Fiscal approach expansion leads to increase rate of
interest which raise the demand for foreign currency and due to this exchange rate increases. For
instance, when expansionary fiscal approach is undertaken by government, it contributes in
increasing interest rates that in turn, attracts foreign capital along with demands for dollars that
results in increasing exchange rates. Likewise, monetary approach expansion will increase the
liquidity in the economy and this outflow of money can increase the foreign exchange rates.
Monetary policy are the activities of central bank that regulates interest rates in economy and it
helps in determination of exchange rates. Fiscal policies are the decision of government for how
to spend, where to spend and imposition of taxes and duties in an economy. Both of the policies
provides different determinants for exchange rates like interest rates, money supply, political
stability, availability of funds, balance of trade and balance of payments. Fiscal and monetary
policies can help to increase income and demands to product of foreign countries that ultimately
lowers the exchange rates in an economy. Exchange rate of a country can have direct impact on
country's GNP and it states that rate of exchange has immense contribution in an economic
growth (Chugunov and Et. Al., 2021).
There are different kinds of factors which need to be considered before developing
economic policies by policy holders. This is because the choice of appropriate economic policy
is affected by various external environmental aspects which need to be kept in mind in order to
generate highest value from the economic policy and ensure that the economic health of the
nation remains healthy. Some of the factors which policy holders need to be considered before
making economic policy related decisions are provided below:
Income distribution: This refers to the statistical measurement of the income earned by
various parts of the population (Costabile, Massabó and Russo, 2020). This needs to be
5

considered by policy holders before making economic policy because the policy may affect
individuals from different income slabs differently. Considering this factor before policy making
helps create an economic policy which supports creation of income equality and reduces unequal
distribution of GDP among the nation's population.
Governance structures: This refers to the governing structure of an organisation including
its regional and political institutions along with its international organisations. This needs to be
considered by policy holders before making relevant policy because it helps the government
optimally utilize different governance institutions and resources in an effective manner to attain
economic development objectives.
6

REFERENCES
Books and Journals:
Chugunov, I. and Et. Al., 2021. Fiscal and monetary policy of economic development. European
Journal of Sustainable Development. 10(1). pp.42-42.
Costabile, M., Massabó, I. and Russo, E., 2020. Evaluating variable annuities with GMWB when
exogenous factors influence the policy-holder's withdrawals. The European Journal of
Finance. 26(2-3). pp.238-257.
7