How can Regulation act as a protectionist measure?
Regulations which restrict importing goods (e.g. 'chlorinated chicken' from the USA) will mean that foreign goods are not permitted to compete with domestic producers.
Explain the logic behind a 'deflationary spiral'
-If people think goods will be cheaper later, they don’t buy today.
-This reduces AD
-This leads to lower prices.
-As people expect lower prices, people put off spending.
(Cycle repeat)
Explain the following cost of high government debt levels: Risk of Credit Downgrades.
-Too much debt (in theory) makes your country less ‘safe’.
-Credit agencies may downgrade your rating.
-Lower ratings mean you have to give higher interest to lenders (to make up for the risk)
What are the main arguments in favour of Privatisation?
-Motive for profit improves efficiency (e.g. X efficiency/Dynamic efficiency).
-Access to private capital to improve/expand industry.
-Government gains money from selling assets.
-Improved customer experience.
Why does Low Productivity mean a country will run a Current Account Deficit?
→ Low productivity increases unit costs
→ Exports are more expensive and we sell less.
→ Trade in Goods and Services is lower.
→ Current Account is in deficit.
What is a ‘budget deficit’?
When government tax revenue is less than government spending.
List some examples of Fixed Costs
examples:
- Rent
- Equipment Leases
- Basic Utilities
- Advertising
- Administration
- Loan Interest
List the assumptions of a monopoly.
There is a single seller of the good.
High barriers to entry/exit.
Extreme differentiation
Imperfect information
How is ICT used to support market research?
ICT (Information and Communication Technology) is used to support market research in various ways, including through websites, social networking platforms, and databases. Websites provide an online presence to gather data and interact with customers. Social networking platforms enable businesses to engage with consumers, conduct surveys, and gather insights. Databases store and organize market research data, making it accessible for analysis and decision-making.
What are two advantages of a mission statement?
→ Signal to employees the overall vision of the firm.
→ To communicate the firm's priorities to all stakeholders.