Nellis is a public limited company. It focuses on constructing large luxury houses. During the last 3 years, its profits have risen because the country is enjoying an economic boom. ‘It’s not all good news - the Government has announced plans to increase interest rates and introduce new legal controls to protect the environment’ said the Managing Director. He thinks these new legal controls to protect the environment will simply leave businesses such as Nellis less profitable.
(a)[2]
What does the term ‘economic boom’ mean?
(b)[2]
Identify two stages, other than boom, of the business cycle.
(c)[4]
Explain how an increase in interest rates could affect Nellis.
(d)[6]
Identify two stakeholder groups. Explain why each group is important to this business.
(e)[6]
The Managing Director thinks that the new legal controls to protect the environment will only make businesses such as Nellis less profitable. Do you agree? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Rapid increase in the level of economic activity/GDP rising quickly” …