Business and the international economy — practice question

Explain the effect of the following changes on GJ. • Depreciation in the exchange rate of country Z • Increase in income tax in country Z

Consider how the following three changes could influence GJ. Which change is likely to have the largest effect on GJ’s profit? Justify your answer. • All jewellery packaging must show the country where the product was made • Country Z has entered a boom phase of the business cycle • A higher percentage of people in country Z use mobile (cell) phones