topic 1.6: governmentobjevtuves and policies

How does government spending affect businesses?

• A) It only increases business costs

• B) It provides public services and infrastructure that benefit businesses

• C) It eliminates the need for taxation

• D) It has no effect on businesses

• E) It reduces business opportunities

B - It provides public services and infrastructure that benefit businesses

How can governments affect business activity?

• A) Through infrastructure provision and legislation

• B) Only through taxation

• C) Only through trade policy

• D) They have no effect on business activity

• E) Only through interest rates

A - Through infrastructure provision and legislation

What is the effect of higher interest rates on businesses?

• A) Lower borrowing costs

• B) Higher consumer spending

• C) Higher borrowing costs and reduced consumer spending

• D) Increased investment

• E) Higher business confidence

What is a tariff?

• A) A tax on imports to make them more expensive

• B) A subsidy for exports

• C) A quota on domestic production

• D) A type of trade bloc

• E) A government grant

A - A tax on imports to make them more expensive

What is a trade bloc?

• A) A tax on international trade

• B) A group of countries that agree to reduce trade barriers between them

• C) A restriction on imports

• D) A business association

• E) A government department

B - A group of countries that agree to reduce trade barriers between them

Governments can affect business activity through providing ____________________ such as roads, airports, and ports.

Infrastructure

A ____________________ is a tax on imported goods.

Tariff

How can governments affect business activity?

• Infrastructure provision (roads, ports, airports)

• Legislation (employment laws, health and safety)

• Trade policy (tariffs, trade blocs)

• Taxation and spending

• Interest rates

What is the effect of interest rates on businesses?

• Higher interest rates:

  • Higher borrowing costs

  • Lower consumer spending

  • Reduced investment

• Lower interest rates:

  • Lower borrowing costs

  • Higher consumer spending

  • Increased investment