Which stage of the business cycle is characterised by high employment, rising prices, and increasing GDP?
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B. Boom. This stage is characterised by high employment, rising prices, and increasing GDP. The other options do not match this description.
What is likely to happen to a business's profits if the economy enters a recession?
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B. Profits will decrease. During a recession, consumer spending typically falls, which can lead to lower sales and profits for businesses.
How might a business respond to an increase in interest rates?
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C. Cut costs and reduce borrowing. Higher interest rates make borrowing more expensive, so businesses may cut costs and reduce borrowing to manage their finances.
Which government objective is likely to be affected by a decision to increase taxes?
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C. Balancing the budget. Increasing taxes can help the government reduce its deficit and balance the budget.
What is the main purpose of government economic objectives?
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C. To manage the economy for the benefit of society. Government economic objectives aim to create a stable and prosperous economy that benefits all members of society.
How might a business respond to a decrease in government spending?
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C. Cut costs and lay off workers. A decrease in government spending can reduce demand for goods and services, forcing businesses to cut costs and lay off workers to stay profitable.
Which of the following is a potential benefit of increasing Gross Domestic Product (GDP)?
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C. Increased business profits. A growing GDP typically leads to higher consumer spending, which can increase business profits.
How might a business respond to an increase in inflation?
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A. Increase prices to maintain profit margins. Inflation erodes the purchasing power of money, so businesses may increase prices to maintain their profit margins.
Which of the following is a potential impact of changes in employment levels on businesses?
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B. Higher business costs. Higher employment levels can lead to increased wages and salaries, which can raise business costs.
How might a business respond to a decrease in interest rates?
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A. Borrow more money to expand. Lower interest rates make borrowing cheaper, encouraging businesses to invest in expansion.
Which of the following is a potential impact of changes in Gross Domestic Product (GDP) on businesses?
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A. Increased consumer spending. A growing GDP typically leads to higher consumer spending, which can benefit businesses.
How might a business respond to an increase in taxes?
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C. Cut costs and reduce borrowing. Higher taxes reduce disposable income, which can lower consumer spending and force businesses to cut costs and reduce borrowing.
Which of the following is a potential impact of changes in government spending on businesses?
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A. Increased consumer spending. Higher government spending can stimulate the economy and increase consumer spending, benefiting businesses.
How might a business respond to a decrease in interest rates?
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A. Borrow more money to expand. Lower interest rates make borrowing cheaper, encouraging businesses to invest in expansion.