Topic Seven (1.7): Economic Influences 2
Introduction
In this topic you will learn about monetary policy, fiscal policy, supply-side policies and exchange rate policy and how these influence a business’s decision-making process and strategy.
Read and Make Notes
Read pages 108 to 116 in Chapter 7 of your textbook and make notes under the following headings:
-
- Government policies to achieve macroeconomic objectives;
- Monetary policy;
- Impact on business and business decisions;
- Fiscal policy;
- Impact on business and business decisions;
- Fiscal and monetary policy: a summary;
- Supply-side policies;
- Reducing rates of income tax;
- Reducing the rate of corporation tax (profit tax);
- Increasing labour market flexibility and labour productivity;
- Spending on infrastructure projects;
- Making it easier to start a business;
- Exchange rate policy;
- Exchange rate appreciation: business winners and losers;
- Exchange rate depreciation: business winners and losers;
- Exchange rate policy summary;
- International competitiveness: non-price factors.
Tasks
Now explore the following resources and add to your notes:
WATCH – Fiscal and Monetary Policy (tutor2u) Links to an external site.
WATCH – Introduction to Supply-Side Policies (tutor2u) Links to an external site.
WATCH – Exchange Rates – Five Key Definitions (tutor2u) Links to an external site.
Activities in the Book
- Complete Activities 7.4, 7.5 and 7.6 in Chapter 7 of your textbook.
- Suggested answers can be found in the digital textbook and in General Resources.
Consolidate
- The following video will help draw together what you have learnt so far. Watch it and add to your notes:
- Now try the exam-style practice questions on pages 93 to 96 and 116 to 118.
- Suggested answers can be found in the digital textbook and in General Resources.
Reflect
- Draw up a table like the one on page 118 of the textbook and complete the self-evaluation.
- If there are any areas about which you are unsure, please go back over your notes, the textbook and the resources listed in this topic before moving on.
Terminology
- Write down (in your own words) definitions of all the key terms from Chapter 7 (pages 108 to 116).
- Tick off these terms on your glossary.
- A helpful tip is to make flashcards for key terms as you go along, with the word on one side and the definition on the other. This makes revision later on much easier.